A Cabinet committee on Wednesday approved pricing and marketing freedom to producers of coal bed methane (CBM) gas and also allowed them to sell the fuel to affiliates.
"The Cabinet Committee on Economic Affairs today (Wednesday) gave its approval for marketing and pricing freedom to the CBM contractors to sell the CBM at arm's length price in the domestic market," a Petroleum Ministry statement said here.
"While discovering the market price for arms length sales, the contractor has to ensure a fully transparent and competitive process for sale of CBM with the objective that the best possible price is realised for the gas without any restrictive commercial practices," it said.
Besides, the companies have been permitted to sell the CBM gas to any of their affiliates in the event they cannot identify any buyer.
"Royalty and other dues to the government, however, shall be payable on the basis of Petroleum Planning and Analysis Cell (PPAC) notified prices or selling prices, whichever is higher," the statement said.
The policy is expected to incentivise the CBM operation in the country to boost gas production, it added.
Most of the natural gas produced in the country is priced as per the formula for domestic natural gas producers.
According to officials, the CBM gas pricing policy approved is in line with the recently unveiled regime governing small and marginal oil and natural gas blocks.
Meanwhile, Minister Dharmendra Pradhan said on Wednesday that the government plans to offer more discovered oil and gas fields of state-run ONGC and OIL in the next auction during next fiscal.
Speaking to reporters here, he said the next round of auctions of Discovered Small Fields (DSF) will comprise of idling discoveries of Oil and Natural Gas Corp (ONGC) and Oil India and the auction would be held sometime in the 2017-18 fiscal.
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