The minister of petroleum and natural gas, Mr Ram Naik, first attempts to scuttle peoples' right to clean air by denying supply of compressed natural gas (CNG) to private vehicles. His next move is to overturn the Supreme Court's ruling by passing an Ordinance. Both efforts fall on their faces. Now his final salvo is to demolish CNG's price advantage over diesel - nothing less than a short fuse to catastrophe as it translates into dirty air and increasing health costs for people. Delhi's destiny stands destroyed.

NEW DELHI, April 29, 2002: The Centre for Science and Environment (CSE) strongly censures the move by Indraprastha Gas Limited (IGL) and its patron the Ministry of Petroleum, on April 28, 2002, to sharply increase the price of CNG. The price hike has ironically made diesel, the dirty fuel, cheaper by 24 paise as compared to CNG, accepted as the environmentally cleaner fuel.

This has triggered off a counter move by the Delhi government to hike bus fares that could effectively destroy efforts to convert to CNG. We see this as nothing short of a devious tactic by the Central government to sabotage the Supreme Court's earnest efforts to move towards CNG.

In a single stroke, the move has killed the economic incentive for vehicle owners to convert to CNG. This is clearly a shortsighted firefighting measure with no perceivable planning for long-term fall-outs. Surely, with a little innovation and planning the high initial investment costs of IGL could have been offset by the Central government with appropriate fiscal instruments, given the time it had on its hands.

IGL has no right to punish its consumers particularly when its own books show spiraling profits since the day of its inception. IGL's net profit for 1999-2000 stood at Rs 40.5 lakh and Rs. 1.8 crore in 2000-2001. According to provisional estimates, IGL's profits this year are an unprecedented Rs 18 crore. In fact, Gas Authority of India Limited (GAIL), a major shareholder, has recorded a profit of Rs 11,700 crore in the current fiscal year.
The profits would have been higher had the ministry not disallowed it to sell gas to private vehicles that had converted to CNG. Thus, by the end of January 2002, IGL was capable of dispensing 5 lakh kg of gas per day but its sales only added up to only 3.6 lakh kg of gas per day because it was not allowed to sell gas to more than 10,000 private vehicles in the city. IGL would have notched up its earnings by Rs 6.6 lakh per day were it allowed to dispense gas to private vehicles.

With such robust profits it is hard to believe that there is urgent need for an immediate price hike. The company is obviously trying to shuffle the blame arguing that it will have to invest a huge amount to achieve the target of supplying 16.1 lakh kg of gas per day - as mandated in the court order.

In stark contrast, estimates show Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), are likely to incur losses of Rs 75 crore per day and 7,000 crore by end-June 2002. But for the petroleum minister, the diesel constituency is clearly more precious. He has asked the oil public sector units (PSUs) not to increase the price of diesel and urged the finance minister to consider a decrease in the excise duty structure to reduce the burden on the oil companies instead.

If profits were the key concern of the Ministry of Petroleum and Natural Gas (MoPNG), then we would advice it to seriously deal with the enormous loss it is incurring each day because of the increased price of crude oil in the international market. If anyone should pay this cost of incompetence it should be MoPNG. The petroleum ministry should be made liable for compensating any loss that IGL incurs due to the obstructive stance of the ministry.
More significantly, the greater loss is public health that is being seriously compromised. The health cost of air pollution in Delhi alone is estimated to be Rs 1000 crore. In simple terms, an increase in CNG price translates into noxious air, asphyxiated people and their slow murder.

It is a matter of utmost distress that when the Delhi government has finally mustered its will to implement the court order (after dragging its feet for four long years) and has actually rolled back the imposition of sales tax on CNG and ordered for 1,000 CNG buses for the capital, the central government is spiking its efforts by raising CNG prices.