Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do. There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Sunday, 10 January 2016

COMMERCIAL MINING OF COAL


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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