A committee headed by C Rangarajan, Chairman of the Prime MinisterÂ’s Economic Advisory Council ( PMEAC), suggested an annual revision in the price of natural gas produced in the country.
The revision should be based on monthly moving average of net back price for producers of Indian LNG and the other volume weighted price of USÂ’s Henry Hub, UKÂ’s NBP and Japan Custom Cleared, the committee suggested in its report submitted to the government recently.
The armÂ’s length price thus computed as the average of the two price estimates would apply equally to all sectors, regardless of their prioritisation for supply under the Gas Utilisation Policy, said the committee.
However, the pricing formula was greeted with pessimism in the industry corridor. Some industry players feel that the price would still be an arrived one and would not give pricing freedom to the contractors.
Government set up the Rangarajan Committee to look into the Production Sharing Contracts (PSCs) in the oil and gas sector and also suggest on pricing of fuels.
It may be noted that currently, $4.2 per million british thermal units (mbtu) is the benchmark for domestic gas price.
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