International BusinessGovt may hike gas price by 30%: Oil Secy
The government may in "weeks" decide on raising price of natural gas produced by state-owned ONGC and Oil India by 30 per cent, Petroleum Secretary S Sundareshan said today.
"(It is) matter of weeks (that a decision on raising prices would be taken)," he told reporters here.
"Power and fertiliser ministries are against the hike (in APM gas price) but Finance Ministry and the Planning Commission are backing the proposal," a Petroleum Ministry official said. "The plan will be put before the Cabinet for approval in 3-4 weeks" time."
The official said the note based on the recommendation of the Tariff Commission, proposes that ONGC be paid Rs 3,875 per thousand cubic meters for the gas it produces while Rs 4,315 would be paid to OIL. Consumer price would be 10 per cent higher than this.
Consumer ministries of power and fertiliser feel that the hike would result in increase in feedstock cost but Finance Ministry and Planning Commission were of the opinion that it would remove distortions in the market.
APM gas prices were last revised in June 2005.
About 40 per cent of the nation"s 140 million standard cubic meters a day of gas output is sold at administered price. A hike in rates of these is an attempt to reduce distortions in a market with more than a dozen rates.
The government has set $4.2 per mmBtu as the sale price of gas from Reliance Industries" eastern offshore KG-D6 fields, while the gas from BG Group-operated Panna/Mukta Tapti fields is sold at $5.73 per mmBtu.
State-owned ONGC lost a whopping Rs 4,745 crore in revenues on selling 17.71 billion cubic meters of natural gas at a rate below production cost in 2008-09.