Some experts feel that the issue of price pooling for natural gas is more complex than that for coal. This is because, unlike coal, there is no monopoly producer for natural gas and hence fixing a uniform price is even trickier.
A six-member committee headed by the head of the Prime Minister’s Economic Advisory Council, C Rangarajan, was tasked with suggesting a formula for gas pricing.
It seems the government wants a uniform price regime for domestic gas. And, if this uniform price for domestic gas is pooled with that of imported gas, it will mean an even higher increase in cost for users of domestic gas.
Some observers feel that price pooling makes sense in coal where an additional 15 to 20 per cent of imported fuel is being added to a total of 377 million tonne of coal supply and, thus, the impact gets averaged out. However, in case of natural gas, it will make sense only if the domestic production base is large enough.
Besides, unlike coal, there is no monopoly producer in natural gas. A uniform price regime will, therefore, mean all producers get paid the same price irrespective of different costs or risks undertaken during exploration and development. Unlike coal price pooling, the issue of the natural gas price has still not come to a conclusive policy resolution.
One of the problems is that the government policy on pricing of both these fuels has so far been inconsistent with the policy adopted for the user industries. Even now, power and fertiliser pricing reforms have little or no correlation with the pricing policy being pursued for coal and natural gas.
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