Below is the edited transcript of his interview with CNBC-TV18
Q: We have often had many conversations about whether the government will move on this or won't it, but they finally decided to bite the bullet. USD 8.4 per mmbtu, that has been the decision that has been taken by the Cabinet Committee on Economic Affairs (CCEA) today?
A: I can only say that as a true patriot for the country, I am a very happy person today because the investment sentiment in the country had really hit rock bottom. In my more than two decades of active career at that level I had not seen the sentiments of investment to be so low in India.
So, I feel this gives a big turnaround for the investment sentiment and look at it from pure economic point of view. We have increasingly increasing our import dependence and we know that that is reflecting in a big way on our forex reserves exchanges parity and the more worrisome and more disturbing aspect is that we have got resource base in our own backyard, which is not being exploited because the domestic production is getting a price of one fourth of the international parity price.
I feel that is a step in the right direction and also look at it, when the Rangarajan Committee was constituted very high top class economists they have given recommendations.
There has to be sanctity with those recommendations. So, I feel that is very much needed, very timely and going forward it will improve the sentiments much better.
Q: I know you are no longer operationally involved with Oil and Natural Gas Corporation (ONGC), but as a past chairman of ONGC take us through what this is going to mean specifically for the company because ONGC stands to be one of the biggest beneficiary of this move?
A: Yes. One has to also keep in mind this is a company that contributes, this year estimated contribution of Rs 60,000 crore towards the under-recoveries of the oil marketing companies (OMCs). So even if in this gas price revision there is an upside of Rs 6,000-7,000 crore, that is in absolute term it sounds very substantial.
But in comparative terms that is not very high and at least that gives comfort to ONGC that they will be able to absorb that sort of subsidy level. First time after many years we have seen that ONGC's profit after tax (PAT) going down almost 18-20 percent, that is worrisome for the investors and worrisome for ONGC, look at the kind of acquisition plans they have for overseas for the energy security of the country. They do need liquidity and that is again a thing in the positive direction.
Q: You brought up the issue about subsidy and understandably this will lead the government perhaps to take back a little bit more from ONGC and Oil India because in a sense they have given you the opportunity to make good on these gas prices. But that would perhaps be fair because all of these blocks were nominations blocks and so there was no profit sharing agreement with the government?
A: I don't think ONGC management should resent that because in a way as it is we are contributing to the economy. This will be another step for ONGC to contribute more, atleast ONGC will have a resource base to contribute more. So, I have to take it in that perspective.
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