'Average out gas prices to make rates uniform'

A government-appointed consultant has advocated pooling or averaging out prices of natural gas supplied to sectors like power and fertiliser to make rates uniform for all plants across the country irrespective of source.

Spanish consultant Marcados Energy, appointed to recommend rationalising multiple natural gas prices, in its final report said pooling of gas consumed by sensitive power and fertiliser sectors was the “most suited” option.

Gas is now sold at anywhere between $1 and $5.73 per million British thermal units (mBtu), depending on the source. The consultant said sectoral averaging out of prices was better than a general cost-based pool covering all consuming sectors and all suppliers that could be achieved only through legislation.

Sectoral pooling “would serve the basic objectives without being heavy on administrative arrangements and cost”, the report said. “It would also facilitate an eventual migration to competitive markets.”

At present, the government fixes the price of gas produced from blocks given on nomination to state-run Oil and Natural Gas Corp (ONGC) and Oil India (OIL), while for others it is determined in line with production sharing contracts.