Sell gas at top prices like coal blocks, spectrum

[prasad1]

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The Kelkar Committee has produced a road map for a market-determined price for natural gas. Inter-generational equity, it says, requires non-renewable resources like gas to be sold to the highest bidder. A lower price deprives future generations of their full entitlement to national resources. This novel argument strengthens the simple logic of auctioning resources to promote efficiency and governance. Selling below auction price is favouritism. The CAG estimated huge losses implicit in the failure to auction spectrum and coal blocks. Similar huge losses flow from failure to auction gas, eroding royalties, taxes and the government’s gas share.
India imports 30% of its gas needs, and this may soon become 70%. Kelkar emphasizes a top price for efficient use and to incentivize all-out exploration. The government must honour exploration contracts saying that any gas found can be sold at the market price. Only then will India get more bids, at higher rates, for new fields. Many critics who want auctions for spectrum and coal oppose auctions for gas. What hypocrisy! This often reflects a desire to hit the Ambanis. Now, the Ambanis and crooked politicians may have committed a thousand sins. But good governance means finding hard evidence and prosecuting Mukesh Ambani. It does not mean violating his contracts. Contract violation makes India’s name mud in the global oil business. That’s why few bids have come in recent exploration rounds under NELP (New Exploration Licensing Policy), whereas over a hundred companies bid at earlier auctions.
All contracts say the government should certify that gas sales were at an “arm’s length” price (a competitive price, not a concessional one for friends). This clause has been twisted into an excuse for price control. The history of this is very smelly.
Times Of India | Blogs

 

[krish44]

we have been a control economy with the bureaucracy in collusion with politicians favouring a few.

so old habits die hard.

we have had scams in spectrum ,coal block allocation

gas ,oil and minerals in addition to coal are other areas getting slowly into auction cycl

while it might lead to better price realisation for the govt, it might also convert into a high cost economy for the indian public

as it is indians are coming to terms with high cost of food and utilities[power,water] , now gas and petroleum will add to the burden

where is it all going to end?

 

[sangom]

The Kelkar Committee has produced a road map for a market-determined price for natural gas. Inter-generational equity, it says, requires non-renewable resources like gas to be sold to the highest bidder. A lower price deprives future generations of their full entitlement to national resources. This novel argument strengthens the simple logic of auctioning resources to promote efficiency and governance. Selling below auction price is favouritism. The CAG estimated huge losses implicit in the failure to auction spectrum and coal blocks. Similar huge losses flow from failure to auction gas, eroding royalties, taxes and the government’s gas share.
India imports 30% of its gas needs, and this may soon become 70%. Kelkar emphasizes a top price for efficient use and to incentivize all-out exploration. The government must honour exploration contracts saying that any gas found can be sold at the market price. Only then will India get more bids, at higher rates, for new fields. Many critics who want auctions for spectrum and coal oppose auctions for gas. What hypocrisy! This often reflects a desire to hit the Ambanis. Now, the Ambanis and crooked politicians may have committed a thousand sins. But good governance means finding hard evidence and prosecuting Mukesh Ambani. It does not mean violating his contracts. Contract violation makes India’s name mud in the global oil business. That’s why few bids have come in recent exploration rounds under NELP (New Exploration Licensing Policy), whereas over a hundred companies bid at earlier auctions.
All contracts say the government should certify that gas sales were at an “arm’s length” price (a competitive price, not a concessional one for friends). This clause has been twisted into an excuse for price control. The history of this is very smelly.
Times Of India | Blogs

As an Indian living just barely above the BPL, my family had been using firewood, coal, charcoal (in our traditional "kariyaduppu"), wood powder from saw-mills, coal powder-cum-dung balls as also the waste leaves of coconut and other trees for a long time. Then came the concerted mass attempt by the GOI to dissuade households from using these conventional, smoke-emitting stoves and we tried the "smokeless chulhas" for some years although firewood was still the main fuel source. Subsequently the non-polluting kerosene-pump-stove came and when Kerosene ration became too little, we had to switch over to the gas stove, though it was costlier even at that time!

Today, firewood is not available easily and the cost is high. Many poor households have been "nudged" (a la Air India !) to convert to gas and that was one reason why even Rahul Gandhi at last requested MMS to keep the number of subsidized cylinders at 12 per year.

Kelkar may be a good economist (I don't know.) but if gas prices shoot up, there can well be a revolution of sorts in most parts of India. It was the GOI which compelled its people to adopt gas stoves and it should have sold the gas without subsidy right from the beginning. Then the rich alone would have used it (the poorer sections would not have fallen a prey to GOI marketing strategies) and the gas would have had to be exported or simply burnt off!!

 

[vgane]

I think market mechanism should decide the prices of locally produced items except for BPL families where money transfer can be done in lieu of subsidy (to reduce the impact of middle man)

For imported stuff, for a level paying field some subsidy becomes necessary

I think we are importing fuel to meet 80% of our needs...So subsidy can be considered..Same is the case with gas

In case of PDS, we are providing subsidy to only BPL families, I guess

 

[krish44]

vganeji
If govt imports fuel , it should market the the same at imported cost plus refining margins and handling cost instead using it as a cash cow by adding a huge tax component

and loading it on consumer.Both central and state govt are living of oil tax revenue.

poor changed from kerosene to gas on govt forcing them .

now they are being forced to beg the govt for subsidies.

this movement to market economy from control economy is thoughtless .

not only poor , even the lower middle class , retired with meagre pensions are taking a big hit on household budgets

it requires a different economic approach to reduce the disparities in income due to shift to market economy

the share market booming with negative growth is a recipe for disaster ,add to it the unrealistic property prices. this can hardly last long

now i am waiting for the bubble to burst

 

[prasad1]

Government must take advantage of the low oil prices to deregulate diesel, RBI governor Raghuram Rajan said on Monday.


Brent crude, a benchmark for Asian and Indian buyers, has fallen 14 per cent since June to $96.38 per barrel. This together with monthly price increases of up to 50 paisa a litre has trimmed losses on the nation's most consumed fuel to just 8 paisa per litre.


"Lower crude oil prices are helping consuming countries like us. Typically a lower oil price means a lower CAD, lower oil subsidies and lower inflation. We need to seize this moment to eliminate diesel subsidies completely. We should take this moment to eliminate diesel subsidies as soon as possible," Rajan told a banking summit here.
Deregulate diesel prices at the earliest: Rajan - The Times of India

 

[krish44]

diesel prices have been raised from 47 to 58 rs a litre by increasing 50 paise a month

People purchasing cars shifted to diesel to save fuel bills. they paid a lakh plus for diesel engines instead of petrol

now people are cursing as they are stuck with diesel cars and diesel prices are getting deregulated.

one more misadventure in west asia will shoot up oil prices again . what will happen to diesel car owners again

one arm of the govt does not know what another arm does

the economic management is screwed up

foreign educated economists not knowing indian ground realities are giving prescriptions for the indian economy which are unrealistic