Finance Minister P Chidambaram expressed hope that the government’s move to raise natural gas price would encourage investment and production in the natural gas sector.
Recently, the Cabinet Committee on Economic Affairs (CCEA) almost doubled natural gas prices to $8.4 per million British thermal unit (mBtu) with effect from April 2014 and applicable for the next five years with a price revision every quarter.
Following are some of the comments of Industry players and analysts on the decision –
The formula-based pricing approach will provide far greater clarity to gas producers than the current discretionary government approval based pricing, said Abhinav Goel, senior director at India Ratings. Also, quarterly revisions will help keep prices aligned with marketsÂ’ rather than being stagnant for years, added Goel.
PMS Prasad, Reliance Industries’ (RIL)s Executive Director and board member, said: “Any movement toward market price is good for the upstream industry. This decision will bring in the much-needed investments in the hydrocarbon sector that are required to reduce the debilitating effect of increasing energy imports upon the economy.”
“This move increases the economic viability of producing natural gas in India. Domestic and international players will take notice of this, making India an attractive destination to put in money,” some other industry players feel.
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