Dear Shri Piyush Goyal-ji :
Felt
good listening to your comments last evening , as you received ET Award
It
is indeed heartening that finally , NDA Govt has started taking some bold
decisions to " free up " the Economy from the shackles of the 20th
Century
One
such decision was regard to commercial mining
of coal
While
congratulating you for the same , I wish to draw your attention to the need for
evolving a comprehensive ,
POLICY FOR EXPLOITATION OF
NATION's NATURAL RESOURCES
I
hope , my following blog ( albeit 2 years old ) , might help crystallize your
thoughts
with
regards,
hemen
parekh
Mumbai
/ hcp@RecruitGuru.com
/ (M) 0 - 98,67,55,08,08
www.hemenparekh.in > Blogs
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Needed - some Simple Answers !
This
is with reference to the controversy surrounding the pricing of KG-6 gas of
Reliance , which started with $ 2.4 , is currently $ 4.2 and slated to rise to
$ 8.4 / unit , from April 2014
Writing
in Times of India , ( Swaminomics
) , eminent economist , Swaminathan Anklesaria Aiyar , made following
points :
>
Reliance ( KG - 6 ) accounts for only 10 % of the gas production in our
country . Balance 90 % is by Public Sector Companies such as ONGC etc
>
Hence , any increase in selling price will mostly benefit government itself
( Any idea , what will government do with this windfall ? )
>
Price - hike envisaged is recommended by a committee headed by Mr C
Rangrajan ( - implying , infallible / sacrosanct ? )
>
By introducing price control on gas , " India's name is mud globally , and
top exploration companies now avoid India "
>
An economic rule of thumb is that " traded Commodities " should be
priced on par with the import price ( my question : irrespective of the
actual cost of production in India ? )
The Rangrajan price of $ 8 / unit , is well below the import price
Not
being an economist , I am confused !
May
be Mr Aiyar can dispel my following doubts :
#
By taking out of our own soil ( or sea ) ,
does gas become a " traded
commodity " ? -
even if entirely sold in India ?
#
Is KG-6 gas a " Natural Resource
" which belongs to the Nation - and
not to Reliance ?
#
Is Reliance the " Owner " of
the gas or a mere " Contractor
" ?
#
Would Mr Aiyar , want the Central Government to extend the same logic
to other " Natural Resources " ( belonging to the country ) , being
dug
out from the earth ( by private companies ) , such as :
* Oil / Coal / Shale Gas
etc ( Fossil Fuels )
* Ores of Iron / Copper / Zinc /
Aluminum etc
* Trees ( timber ) that grow in
our jungles
* Any number of minor minerals /
chemicals
Should these too , be treated as " Traded Commodities " , whose local
selling prices must be same as Imported prices ?
#
What about the air / wind that blows freely over
our land ?
Does it belong to the Nation or not ?
Or , does it belong to the Companies setting up WIND FARMS , to
generate electricity ?
Should such power be " Price Controlled " or not ?
#
What about the Sunlight that falls on our
vast land ?
Who does it belong to ? To our government or to the companies setting
up mega Solar Power Projects ?
Should there be a price control on such power - produced , using a
National Resource ?
#
What about the hydro - power generated by private sector companies
from the water flowing in our Country's rivers
?
Does - or does not - that water belong to the Nation ?
Should not such power be price - controlled ?
#
Tomorrow , if a private sector company ( or a consortium of Indian
Companies , in joint venture with foreign companies ) , invest Rs 1 Lakh
Crores , to build the 22 Km long Kalpsar Dam across the Bay of Cambay
in Gujarat , and generate 10,000 MW of power from Oceanic
Tides
, -
can they be allowed to set any selling price ? At International
price ?
I suppose , it would be next to impossible for them to " Export "
such
power beyond the shores of India !
#
Incidentally , what about the Airwaves ( the
2G / 3G Spectrum ) ?
Is that also a Natural Resource which belongs to the Nation ?
Having " licensed " it from the Central Government , can Mobile
Phone companies , set any selling prices for their services ?
Even with a combined debt of around Rs 2 Lakh Crores , how are these
Mobile companies , able to deliver ( nearly ? ) cheapest mobile phone
services in the entire World ? May be at 10 %
of international price ?
#
In ALL of the above - mentioned cases , should Central Government
carefully calculate / frequently audit , the " Cost of Production " ?
Then
link the " Local / Domestic , Selling Prices " to such "
Cost of Production "
allowing certain pre-determined " Return
on Investment " ?
#
Even as we agree that " Export prices " of gas are governed by
prevailing
international prices , how come the " Domestic Prices " of gas are
vastly
different in different countries , ranging from under $
1 to $ 5 / unit ?
Does this itself , not prove that , in each
country , domestic prices are
linked to their own local " Cost of
Production " ?
#
Very often , have we not exported , food grains , at " Below the Cost " ?
Mr
AIYAR ,
You
will be doing a great service to millions of ignoramus like me , by offering
your own " Views " on the points raised above
And
, I suppose , since the fall in production from KG - 6 , is purely and entirely
, due to " Technically Sound " reasons , raising of the selling price
to
$
8 ( or even $ 16 / - ! ) , won't result in any increase in production !
Time
alone will tell !
*
hemen parekh ( 17 Feb 2014 /
Mumbai )
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