Oil and gas major Reliance Industries (RIL) today told the Supreme Court that gas price hike will benefit ONGC , Oil India more as they produce more than 70 percent of India’s gas requirement. The new gas price regime is effective from April 1. CPI leader Gurudas Dasgupta and Prashant Bhushan have called for a stay on the new gas price regime .
The duo are accusing the Centre of colluding with Reliance and hiking the price of gas to provide windfall gains to the company. Reliance has rubbished all these allegations. The hearing in the gas price hike case went on from 10:30 am to 4 pm. Biggest of lawyers are involved in this case and daily hearings have begun with litigant Gurudas Gupta's lawyer Colin Gonsalves beginning the arguments. Gonsalves spoke about how chief ministers in Tamil Nadu and Andhra Pradesh have written letters to the Centre saying how Rs 40,000 crore of investments made in the power sector now stands stranded. Harish Salve, the counsel for Reliance Industries, spoke just a little bit to counter Gonsalves.
He said that because of technical reasons production has fallen. Commenting on the entire issue, RS Sharma, former chairman of ONGC, agrees that ONGC will benefit the most from this move. He says last week the new ONGC chairman had said that this new gas price will translate to additional revenues of Rs 16000 crore per annum for the company. But the more pertinent issue, according to Sharma, is the legality of the issue. He says the production sharing contract was signed after proper validation by the law ministry and after approval by Cabinet Committee. Based on the open offer, the parties participated in the auction, now the main point is about the sanctity of the contract having being signed, he explains. So leaving aside the commercial issues, the sanctity of the contract is most important - there is the question of the credibility of the sovereign government – it has to be honoured.
He says it is more important to implement the contract (production sharing contract) in its true spirit. SC Tripathi, former oil secretary, explains that in a previous judgment in 2009-10, the Supreme Court had ruled that all natural resources belong to the government. "According to SC, even operator’s share doesn’t belong to the operator, the government is the owner, until it reaches the consumer," he adds. Now since the government is the owner, it has to decide the price, thus dragging the CAG and the Parliament into the picture to look into the costing. Now since the operator cannot decide the price and whom to mark it, the government has to decide based on investment and costing, says Tripathi. So unless the SC revisits its earlier decision, the production sharing contract in the original spirit will not work, he add
Source: MoneyControl
The duo are accusing the Centre of colluding with Reliance and hiking the price of gas to provide windfall gains to the company. Reliance has rubbished all these allegations. The hearing in the gas price hike case went on from 10:30 am to 4 pm. Biggest of lawyers are involved in this case and daily hearings have begun with litigant Gurudas Gupta's lawyer Colin Gonsalves beginning the arguments. Gonsalves spoke about how chief ministers in Tamil Nadu and Andhra Pradesh have written letters to the Centre saying how Rs 40,000 crore of investments made in the power sector now stands stranded. Harish Salve, the counsel for Reliance Industries, spoke just a little bit to counter Gonsalves.
He said that because of technical reasons production has fallen. Commenting on the entire issue, RS Sharma, former chairman of ONGC, agrees that ONGC will benefit the most from this move. He says last week the new ONGC chairman had said that this new gas price will translate to additional revenues of Rs 16000 crore per annum for the company. But the more pertinent issue, according to Sharma, is the legality of the issue. He says the production sharing contract was signed after proper validation by the law ministry and after approval by Cabinet Committee. Based on the open offer, the parties participated in the auction, now the main point is about the sanctity of the contract having being signed, he explains. So leaving aside the commercial issues, the sanctity of the contract is most important - there is the question of the credibility of the sovereign government – it has to be honoured.
He says it is more important to implement the contract (production sharing contract) in its true spirit. SC Tripathi, former oil secretary, explains that in a previous judgment in 2009-10, the Supreme Court had ruled that all natural resources belong to the government. "According to SC, even operator’s share doesn’t belong to the operator, the government is the owner, until it reaches the consumer," he adds. Now since the government is the owner, it has to decide the price, thus dragging the CAG and the Parliament into the picture to look into the costing. Now since the operator cannot decide the price and whom to mark it, the government has to decide based on investment and costing, says Tripathi. So unless the SC revisits its earlier decision, the production sharing contract in the original spirit will not work, he add
Source: MoneyControl
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