Now that the NTPC has also staked claim to natural gas at a cheaper price, it appears as if the petroleum ministry was in a tearing hurry to support the higher price being sought by Reliance Industries. In other words, the suspicion of bias on this critical issue has now reared its ugly head.

To add to the confusion are claims being made by several private producers who naturally feel that their power projects would become uncompetitive if the Anil Ambani group is given natural gas at half the price they are paying. Their claims will become stronger with the government pitching for the NTPC to be supplied gas at the lower rate.

Anil Ambani's company added more fuel to the fire by launching a series of print media advertisements alleging that the government was not acting in the national interest by supporting the proposal for higher natural gas prices from the fields of the Krishna-Godavari basin.

These advertisements did put pressure on the government to ensure that it appears objective and unbiased on the gas pricing controversy. It also led to various ministries involved reaching a consensus before making submissions before the apex court.

Now the government seems to be veering around to support the NTPC's demand for natural gas supplies at a cheaper price, while also insisting on higher rate for other companies. But it is yet to be seen whether this duality of approach would be acceptable to the apex court, particularly since the Bombay High Court had ruled in favour of Reliance Natural Resources.

The issue remains before the courts and so all parties concerned are now waiting for Oct 20 when the Supreme Court will take up the case. But the entire controversy has come at an extremely inconvenient time for the government as it has just launched another round of auctions for oil and gas assets in areas including the Krishna-Godavari basin.

It fears potential investors may be scared away by the prospect of the government interfering over pricing and other issues at a later date when oil and gas are actually discovered and produced by these companies.

There is no doubt that on issues like natural gas, which is a critical component of the country's energy security, the availability and pricing cannot be decided by two warring private companies. The natural gas reserves remain a national resource that need to be properly conserved and utilised for the country's long-term needs.

At the same time, the government needs to have a coherent and consistent policy towards natural gas pricing. But this cannot be done as a knee-jerk reaction to the present turmoil over gas prices. A long-term policy needs to be evolved soon to avoid further confusion for both producers and consumers of this important source of energy in an energy-starved country.

(30-08-09-Sushma Ramachandran is an economic and corporate analyst. She can be reached at sushma.ramachandran@gmail.com)