| In what could put an end to Oil and Natural Gas Corporation bearing the brunt of cross-subsidisation, the group of ministers on gas pricing has decided that the public sector oil giant should not be made to subsidise the higher cost of gas produced from private fields.
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| The cost of natural gas produced from private sector fields has increased by 30 per cent. Gas from joint venture and private parties as well as regasified LNG imported from Qatar is being supplied at market-determined prices to users.
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| ONGC, on the other side, bears a under recovery of about Rs 3,000 crore annually due to the difference in the present producer price and its cost of production, said officials.
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| ONGC and OIL get one-third of the price private operators get for their gas. The public sector companies sell gas produced by them from nominated blocks operators at $1.37 per million British thermal unit (Rs 2,372 per million standard cubic metre) as against private fields which are paid in the range of $3.30 MBTU (Rs 5723/mscm) to $3.86 mmbtu (Rs 6694/mscm).
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| The total availability of gas from nominated fields is about 55 mmscmd though the total allocation to power and fertiliser sectors is 84 mmscmd. This shortfall is made up by public sector Gail by supplying gas from the private fields.
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| Under the existing pricing mechanism, out of the total realisation of consumer price of ONGC gas at APM rate, Gail retains the amount required to pay for the higher cost of joint venture gas.
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| The remaining is passed on to ONGC as the producer price. This implies that while the consumer price works out to Rs 2,850, ONGC receives only about Rs 2,150.
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| The production from the existing APM fields is on the decline with production projected to go down to about 36 mmscmd by 2009-10 and to about 8 mmscmd by 2014-15.
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| The petroleum ministry also told NTPC that it would have to bear the burden of about 30 per cent increase in the gas price supplied by the consortium operating Panna, Mukta and Tapti fields.
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| There is a consensus within the government that power and fertiliser sectors whose output price is controlled by the government should be supplied gas at regulated rate. Sectors such as petrochemicals, steel, glass and ceramics and transport gas could be supplied at market regulated price. |
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