Millennium Post

Final decision on Ranga panel gas price hike plea likely today

The Cabinet on Thursday will decide on raising natural gas prices for the first time in three years even as the move faces stiff resistance as it would result in rise in electricity tariff and fertiliser cost.

The Oil Ministry's proposal to price all domestically produced natural gas as per a complex international hub and imported LNG-based formula suggested by the Rangarajan panel is listed as item number 8 on the agenda of Cabinet Committee on Economic Affairs (CCEA) meeting scheduled for Thursday.

It wants gas prices to be revised every quarter till 2017 when rates will be completely freed, sources said. If approved, gas price will rise to $6.775 per million British thermal unit from $4.2 currently.

The rates will jump to $8.55 in April 2014 when Reliance Industries is entitled for revision in price for its eastern offshore KG-D6 gas.
As the economy is already reeling under high inflationary pressure, the Cabinet Committee on Economic Affairs, some government insiders say, may not accept the Oil Ministry's proposal of revising prices every three months based on quarterly average of international hub and imported gas (LNG) price.

It may approve a 'moderate' revision but put a cap or ceiling of no more than $7 per mmBtu as it would be not advisable to have a fuel cost with cascading impact on the economy,  change every quarter and that too based on international volatility. Sources said there was also a possibility of the issue being referred to a ministerial panel for wider consultation.

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