House panel for review of Rangarajan gas formula

A parliamentary panel has sought a review of the Rangarajan formula that will be used to price natural gas from April next year, saying the rate should be fixed after factoring in the domestic cost of production.

The standing committee on petroleum and natural gas, in a report tabled in Parliament, said the proposed formula is a simple average of two methodologies - price of imports of LNG into India by different suppliers, and weighted average of prices of natural gas prevailing at Henry Hub in the US, National Balancing Point in London and netback import price at the well head of suppliers into Japan.

"It is to be observed the benefit of lower gas price at Henry Hub has been largely diluted by the inclusion of Japan's liquefied natural gas and host of other factors," it said.

The panel said Russia, which exports 40 to 50 per cent of its gas to Europe at a price of about $8.77 per million British thermal unit, could be a better indicator of gas price.