'Stalling of gas price hike will impact investments'

Investors and India Inc have criticised the Election Commission’s decision to defer the gas price hike, with the industry chamber CII saying the decision to stall price revisions could have a long-term impact on the investment climate in this crucial sector.

“We would like to reiterate that it is only a computation decision where the formula is pre-fixed on the basis of a Cabinet decision,” CII President Kris Gopalakrishnan said.

The Election Commission on Monday asked the UPA government to defer doubling of the price of fuel produced by companies such as Reliance Industries till the general elections are completed. On Tuesday, shares of ONGC and Reliance Industries were under pressure in trade.

Meanwhile, the Supreme Court resumed its hearing on the KG-D6 gas price hike. The government told the court that it will not go ahead with the gas price hike after the EC’s letter.

“The EC’s decision to defer the government’s proposal on gas prices would go against the stated government policy and adversely impact investment decisions of the oil and gas industry,” the CII statement said, adding, “To keep gas prices suppressed at the existing level, which is almost at half of the estimated revised prices, would be a bonanza for poll-bound consumers, which by itself may be treading on the model code of conduct.”

A new pricing regime was to be implemented from next month for all private and public sector natural gas producers under which rates were to rise to $8.3 from the current $4.2 per million British thermal units.

Though the decision to revise gas prices from April 1, 2014 was first taken in June 2013 and notified on January 10 this year, the oil ministry had approached the EC for permission to announce the new price.