Home » House panel suggests cap on gas pricing

House panel suggests cap on gas pricing

House panel suggests cap on gas pricing

A Parliamentary committee suggested the government to impose a cap on natural gas price once it is linked to the formula proposed by the Rangarajan panel from April 2014.

The Parliamentary committee suggested the cap in order
to avoid the potential for unlimited gains to local producers owing to an upswing in global prices.

It may be recalled that two months ago the union cabinet allowed the price of domestic natural gas to be determined by the Rangarajan committee formula from April 2014.

The proposed cap would also limit damage to the recovery of the economy, the parliamentary panel said in its report. The fertiliser and power sectors would be adversely affected by the increase in natural gas price once the formula takes effect from April 2014.

Recommendations of the panel are not binding but usually have a bearing on government policy. Revision in gas pricing is seen as benefiting Reliance Industries (RIL), whose existing contracts for gas sales from block D6 on the east coast are expiring on April 1, 2014.

The committee’s report on the ‘Economic Impact of Gas Price Revision’ also asked the government to ensure Reliance delivers any shortfall of gas it owes to customers at the old price of $4.2 per mmBtu.

Leave a Reply