The government Wednesday said it will come out with a new natural gas pricing formula by end-September that would take into account the interests of investors and the public.
Petroleum Minister Dharmendra Pradhan told the Rajya Sabha that the NDA government had decided to review the gas pricing formula keeping in mind public interest and the recommendations of the concerned Standing Committee of parliament.
The new formula will be announced by Sep 30, the minister said replying to questions in the upper house.
The existing gas price under the New Exploration Licensing Policy (NELP) was approved in 2007 and was to remain valid up to March 2014.
In June, the newly-installed NDA government deferred by three months a decision on raising the price of locally produced gas, saying a comprehensive discussion was required on the issue.
The UPA government had decided to almost double the gas price from the existing rate of $4.2 per unit. Major domestic producers Reliance Industries (RIL) and the government-run Oil and Natural Gas Corporation (ONGC) have said that the current price is not enough to explore new areas of reserves.
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The new price was supposed to be implemented from April 1, but was deferred due to the general election.
RIL and BP have already served an arbitration notice on the government over delay in revision of gas prices, which for their KG-D6 field, was due on April 1, after the five-year validity of the old $4.2 per unit rate expired on March 31.
The Rangarajan formula recommends pricing rates at an average cost of importing liquefied natural gas (LNG) into India and rates prevailing at international hubs in the US and Britain as well as price of gas imported into Japan.
There has been opposition to the formula from various quarters on account of its likely effect on electricity tariff, urea cost, CNG rates and piped cooking gas price.
Every dollar increase in gas rates will lead to a Rs.1,370 per tonne rise in urea production costs and a 45 paise per unit increase in electricity tariff. There would be a minimum Rs.2.81 per kg increase in CNG rates, and a Rs.1.89 per standard cubic metre hike in piped cooking gas cost.