New Delhi: For the second day straight, finance minister Arun Jaitley and oil minister Dharmendra Pradhan met in Prime Minister’s Office (PMO) on Monday to come out with an acceptable solution on the domestic natural gas price hike issue.
The government is looking at various options to see that while gas prices are hiked, it does not increase inflation too much at a time when there are chances of a weak monsoon. The UPA government had accepted a formula suggested by the C. Rangarajan committee which had sought to double the price of natural gas from domestic oil fields from April 1, 2014. Under this formula, gas prices will increase from current $4.2 per million British thermal unit to around $8.4 per mmBtu.
However, the said price increase could not be implemented as the code of conduct set in due to the general elections. The various options being discussed by the government include allowing higher prices only on output that exceeds current production, or to allow hike only from those gas fields which were given under the New Exploration Licensing Policy (NELP).
This would exclude state-owned firms including ONGC, which produce gas from pre-NELP blocks, from the revision. This would mean there will be no hike in CNG and piped cooking gas price because their input comes from ONGC fields.
The government is also looking at the possibilities of changing some of the elements in the Rangarajan formula so that the hike in not that steep. The Centre is looking whether high-priced Japanese imports, which have no relevance to India, should be excluded from the formula to limit the gas price increase to about $7-7.5. Oil companies are claiming that the current $4.2 per million British thermal unit rate is not enough to help produce gas from new finds in deep-sea.
