He declined to say much since the case is sub-judice but said this would be the century of gas. He also tells Vandana Gombar about plans to hold the biggest-ever auction of oil and gas blocks in the country and the "bold" move to acquire Imperial Energy for $2.1 billion.
Can we get some clarity on the price of this gas? The price approved by the group of ministers is based on crude oil at $60 per barrel or above. Now that crude oil is below $40 a barrel, does it mean that there will be a change in that price?
The formula uses last year's average price. The year's average price is still above $60.
What about fuel pricing? The government is looking at options to free fuel pricing from government control.
That is one of the options, yes, one of the suggestions. Whether that will happen or not, I cannot say.
And that suggestion is of a maturity that it has already been taken to the Cabinet?
No, I don't think so. It is not good to talk about pricing till something comes out. It leads to all kinds of apprehensions. People start hoarding. There is sometimes shortage.
Is the government looking at a price cut on a stand-alone basis or a cut that will coincide with the move to market pricing?
There are very many options and all these have to be considered.
And what happens to the under-recoveries meanwhile? Are they still estimated at Rs 110,000 crore for the year?
The number is less now. It is a little over Rs 1 lakh crore, but again this will change because the prices keep changing.
Keeping aside the Rs 90,000 crore-odd accounted for in the first half of the year, the burden of additional under-recoveries will have to be borne by the government as the firms have declared their inability to take on more burden.
Let's see. We are trying to find a formula. It is not yet decided. There was one formula decided in June - 50 per cent from oil bonds and the rest from upstream and downstream (companies). Let's see what the new formula says.
What are your priorities for 2009?
For me, there are six clear priorities. One is that since we are very deficient in gas and crude oil, we have to intensify exploration and production efforts. In the past months, we have awarded 44 blocks, which is the highest ever. We are going to offer in the next one or two months a record number of blocks, about 100.
But is this a good time to auction the blocks given crude oil prices and the financial situation?
Those who put in their tenders don't look at the past three months. They look at the next several years and so I think it is not a bad time. Everybody is expecting that the recession will end. There could be differences of opinion on the duration - somebody would say six months, somebody two years, somebody at best three years - but this investment is going to be spread over several years.
I don't think there is an issue. We can't halt this programme for good times to come because this is also a good time. By the time you finalise the bids, another 8-9-10 months will be over. Let us see what is the scenario that time. You may not award the block if you think the bids are not as they should be.
But there is no harm in calling for the bids and seeing. Moreover, there is no suggestion from serious investors that don't call the bids. Nobody has said it is not a good time. There may be some whispers here and there and a majority of them are welcoming.
Besides exploration and production, what are the other priorities?
Acquisitions abroad. The biggest-ever acquisition (of Imperial) by any public sector company took place in the recent months.
Some say it was an ill-advised move, but there was no room for manoeuvre.
You should always look at long-term possibilities. The point is that the basic policy remains intact that you should aggressively acquire assets abroad. So a bold move was taken and it has gone to its logical conclusion. Where is the question of regret?
Refining is also a priority. If demand is declining, especially in export markets, is there a proposal to allow export units some sales in the domestic tariff area?
Let them ask for it. It will be examined by the ministries concerned and things will be decided on merit.
