Gas price hike will lead to more investments: Salman Khurshid

The central government's decision to double gas prices will lead to more investments into oil and gas exploration sectors and help in addressing global warming concerns, External Affairs Minister Salman Khurshid said on Friday.

"At present, we are paying USD 4.5 for local oil and gas while we import at USD 13. If we do not increase the price from USD 4.5 to USD 6 or USD 8, which can bring more investments into exploration, then we have to keep on importing at a higher price and remain dependent on others," Khurshid said addressing Congress workers at PCC office in Srinagar.

He said price hike was not due to inefficiency of the government but because of the fact that India imports 80 % of its fuel requirements.

"If the prices increase, it is not because we are not doing our job well. It is because we import 80 % of our fuel requirements. Today, gas is not only used for domestic purposes but also used for generating power and operating factories and trains," he said.

The Cabinet Committee for Economic Affairs on Thursday approved hiking natural gas price to USD 8.4 per mmBtu from the current USD 4.2 per mmBtu with effect from April, 2014.

The increase in gas price was opposed by user ministries of power and fertiliser as it would lead to cost of generating electricity spiking to Rs6.40 per unit from Rs2.93 and nearly Rs9,000 crore per annum rise in cost of urea output.

Khurshid said that "it was not an easy decision" as even some of the allies in the government did not understand it.

"It was not an easy decision. It was a difficult decision ... our own partners did not understand this," he said.

Explaining the rationale behind raising the gas price, Khurshid said India cannot go on using coal for fueling the thermal power projects as it can isolate the country from rest of the world on issue of climate change.

"If we continue to produce electricity using coal (thermal power projects), we will be isolated from the world. The international community is saying that you (India) alone does not have rights over the environment. I went to Chile where people showed me a 20-year-old photograph and said the snow-line has receded due to global warming," he said.

Khurshid said receding snow-line is something happening in India as well.

"It is happening here also in the Himalayas. The glaciers are melting and the results can be seen in Uttarakhand. We have to make arrangements to ensure that the environment is protected and the temperature does not rise," he added.