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Towards market – driven prices

Towards market – driven prices

The oil ministry's plan to make users of domestic natural gas pay more so that costlier imported LNG finds buyers has been opposed by a high-level committee, headed by former finance secretary Ashok Chawla, saying prices should be market-determined.

The high-level committee on allocation of natural resou­rces said in its draft report said, In the ideal scenario, the committee said, a gas pooling arran­gement, with a view to mitigate price volatility is not recommended.

The oil ministry is pushing for pooling or averaging out the price of domestic natural gas and imported LNG so that the high cost imported fuel con­tracted by Petronet LNG finds users.  
The panel called for market-determined pricing of natural gas and recommended the use of gas as an industrial fuel and for cooking and transport purposes instead of burning it in power and fertiliser plants.

Subsidised gas should not be provided as an input (feedstock) for power plants since most of the output (electricity) is sold at market price.

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