Union Petroleum ministry has circulated a note to the Cabinet Committee on Economic Affairs (CCEA) seeking hike in the price of natural gas produced by both private and state-run companies.
The ministry’s proposal, if accepted by the CCEA, may benefit firms like ONGC, OIL, Reliance Industries (RIL), Cairn India who are selling the fuel at a pre-determined price.
According to the cabinet note, the oil ministry wants the price to be hiked to $6.7 per million British thermal unit (mmbtu), less than $8-8.5 mmbtu hike previously expected, media reports suggest. ONGC, OIL and RIL currently get $4.2 per million British thermal unit as the price of natural gas.
The ministry wants Rangarajan Committee recommendation of pricing domestically produced natural gas at an average of international hub prices and cost of imported LNG instead of present mechanism of market discovery be accepted with a minor modification.
The ministry also proposed notifying the gas price on a quarterly basis, instead of Rangarajan panel’s suggestion of calculating gas price every month.
Media reports indicate that the ministry recommended the application of the pricing formula proposed by the panel to all forms of natural gas – conventional, shale and coal-bed methane (CBM). Also, the price determined shall be applicable to all consuming sectors uniformly.
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