New petroleum and natural gas minister Veerappa Moily promised to speed up decisions to revive investor sentiment in the sector and highlighted the need to spur consumption of oil and gas for the economy to grow faster. After taking charge on Monday, Moily said, ?We will create a roadmap for more investment in the sector and take policy initiatives to increase oil and gas production.? His remarks are particularly noteworthy as his predecessor Jaipal Reddy was seen to be playing hard ball with the country’s largest private sector oil and gas explorer Reliance Industries by refusing to hike the KG D6 block gas price. Reliance blamed a decline in pressure and water ingress for falling production, and sought an increase in gas prices to justify higher expenditure to develop the block.
Reddy, who is now the science and technology minister, had questioned the steep decline in gas production in the block and expenses claimed by RIL. He also brought RIL under the scrutiny of the Comptroller and Auditor General (CAG) and disallowed a $1.46-billion expenditure.
Asked if he favoured a revision in the price of gas from the D6 block earlier than a review scheduled for 2014, Moily declined to address the matter specifically.
The new change, however, has brought some cheer to Reliance’s stocks. The stock market, which already gave a thumbs up to its shares with a 2% increase at the opening bell, feels the decision to increase gas price will be coming soon.
Fuel subsidy: Oil min to seek over R1 lakh cr from finmin
The oil ministry will seek over R1,00,000 crore from the finance ministry this fiscal towards fuel subsidy, new petroleum minister M Veerappa Moily said on Monday.
State-owned fuel retailers are likely to end the fiscal with a revenue loss of over R1,63,000 crore on sale of diesel, LPG and kerosene at government-controlled rates that are way lower than cost, he said soon after taking over as the new oil minister.
?Of this, about R60,000 crore will come from upstream companies Oil and Natural Gas, Oil India and GAIL India. We will ask the finance ministry to compensate the rest by way of cash subsidy,? he said.
With the finance ministry mum on the requisite budgetary support, oil marketing companies are fearing a rating downgrade. Borrowings of the government-owned entities are poised to touch record highs this fiscal. In 2011-12, government gave out R83,500 crore as cash subsidy, up from R41,000 crore in 2010-11 and R26,000 crore in 2009-10.
