The price of natural gas will be revised after every six months
In a setback to Mukesh Ambani-led Reliance Industries (RIL), the company will continue to get the old price of $4.2 mmBtu till it makes up for the shortfall in output from the KG-D6 block. (Photo: PTI/File)
New Delhi: The Cabinet Committee on Economic Affairs under Prime Minister Narendra Modi on Saturday approved raising the price of domestically produced natural gas to $5.61 per mmBtu from the current $4.2 per mmBtu from November 1.
This will push up the price of CNG, PNG and power even though the Centre said all efforts will be made to ensure that the burden on the people is absorbed as much as possible. The price of natural gas will be revised after every six months.
In a setback to Mukesh Ambani-led Reliance Industries (RIL), the company will continue to get the old price of $4.2 mmBtu till it makes up for the shortfall in output from the KG-D6 block.
This even as the gas from RIL’s KG D6 block will be sold at new prices. RIL and the government are currently involved in arbitration on the issue of cost recovery from the block.
"It is proposed that the difference between the revised price and the present price ($4.2 per million BTU) would be credited to the gas pool account maintained by GAIL and whether the amount so collected is payable or not to the contractors (RIL) of this block would be dependent on the outcome of the award of pending arbitration and any attendant legal proceedings," the petroleum ministry said.
The gas production from RIL’s D1 and D3 gas fields in the KG-D6 block is eight mmscmd against the proposed 80 mmscmd. The increase in natural gas price approved by the Modi government is
75 per cent less as compared to the price approved by the previous UPA regime using the Rangarajan formula.
"Cabinet revised price of domestically produced gas. UPA government had approved increase from $4.2 per mmbtu to $8.4; today decided the price at $5.61 (sic)," tweeted oil minister Dharmendra Pradhan.
The UPA government had accepted the C. Rangarajan committee formula, which had sought to double the price of natural gas from domestic oil fields from April 1, 2014. However, the decision could not be implemented as the model code of conduct had set in due to the Lok Sabha elections. The decision on gas pricing then fell on the Modi government.
In August-end, the BJP-led NDA government constituted a four-member panel of secretaries to review the formula. The committee suggested modifications to the Rangarajan formula. The petroleum ministry said that around 80 per cent of the additional revenue due to the revision in gas price will go to government companies. The government will get an additional revenue of Rs 3,800 crore per annum on account of higher royalty, higher profit petroleum and higher taxes.
The new gas price which will come into effect from November 1 will be valid till March 31, 2015. Thereafter, it will be revised for the period of April 1, 2015 to September 30, 2015 on the basis of prices prevalent between January 1, 2014 and December 31.
( Source : dc correspondent )
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