A Planning Commission study has said prices of natural gas sold by the public sector companies Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) should be aligned to the price of $4.2 per million British thermal units (mBtu) decided by the empowered group of ministers (EGoM) for Reliance Industries Ltd (RIL).
The study, meant as a supplementary to the Integrated Energy Policy, has said that natural gas prices of these companies have been artificially kept at low levels.
ONGC and OIL produce gas sold under an administered price mechanism (APM). The petroleum ministry has proposed a 44 per cent increase in prices of natural gas sold under the APM. It wants $2.6 per mBtu against a current price of $1.8 per mBtu. However, even after this hike, the price will be significantly lower compared to the price of $4.2 decided by EGoM for the gas produced by RIL from its KG Basin.
“We want to progressively increase the price of APM gas to match the market price,” V L V S S Subba Rao, joint adviser (finance) in the petroleum ministry said earlier this month. At 45 million metric standard cubic metres a day (mmscmd), APM gas currently accounts for over 34 per cent of the country’s 130 mmscmd availability (including the latest production from Reliance’s KG basin). However, the share of APM gas in total availability has been coming down gradually.