'Gas price increase could be staggered'

JPMorgan Chase expects gas prices in India to be raised in a staggered manner rather than one-time adjustment.

"Keeping the interests of both producers and consumers in mind, we expect prices to rise in a staggered fashion, rather than a large one-time increase," said

JPMorgan's Asia Pacific Equity Research analysts Samuel Lee and Neil Gupte, in their report on Reliance Industries.

The government is likely to announce its decision on gas pricing by this month-end. The United Progressive Alliance government had in June 2013 approved a new pricing formula, which would have, post-implementation, doubled prices from April 2014.

Though the formula was notified in January 2014, the announcement was postponed keeping in view the completion of the polls in May. The price rise was postponed to June 30, and again till September.

"Taking the various factors into consideration, we now assume prices are raised to $6.5 a million British thermal units (mBtu) later this month, rising $1 a mBtu every year thereafter before stabilising at $8.5 a mBtu," the analysts said.

As India, at present, doesn't have a clear national energy policy, to increase exploration and production in the country to reduce reliance on imports, and to increase the proportion of gas in the energy mix, a more progressive pricing regime is essential, the report added.