Govt proposes to hike gas price
The government is contemplating hiking prices of natural gas produced by state-owned oil and gas exploring firms like Oil and Natural Gas Corp (ONGC), Oil India Limited (OIL) and GAIL by as much as 30 per cent.
An indication to this effect was given by Petroleum Secretary S Sundareshan on the sidelines of the Sixth Asia Gas Partnership Summit here on Monday. “The issue of raising the gas price is in the final stages of decision making in the government. A decision will be taken soon,” he told newsmen.
Gas price may be increased by 30 per cent, sources in the Petroleum Ministry said.
Price of gas produced by ONGC and Oil India Limited from fields awarded to them on nomination basis were last revised in 2005.
The current rate of Rs 3,200 per thousand cubic metre ($1.79 per million British thermal unit) is less than half of the $4.2 per mmBtu price of gas from the KG-D6 field of Reliance Industries. It is learnt that the ministry has suggested hiking gas price under the administered pricing mechanism (APM) to Rs 4,142 per thousand cubic metre ($2.32 per mmBtu).
A further hike in gas price under the APM would impose additional burden on the state-owned oil marketing companies, who are currently getting gas from public sector oil and gas explorer like ONGC, GAIL and OIL at a discount.
State-owned oil marketing firms are incurring losses by selling four mass consumed petroleum products—petrol, diesel, cooking gas and kerosene—below cost prices. As per an estimate, state-owned oil marketing firms are likely to incur a revenue loss of Rs 45,000 cr during the current fiscal 2009-10.
