OilMin seeks comments on proposal to hike natural gas price

Oil ministry has sought comments from concerned ministries on its proposal to hike the price of natural gas produced by ONGC and Oil India by 30 per cent.

"Inter-ministerial consultations are on," Oil Secretary R S Pandey told reporters here.

The Ministry has circulated a Cabinet note for raising price of gas under administered pricing mechanism (APM) from Rs 3,200 per thousand cubic meters ($1.79 per mmBtu) to Rs 4,142 per thousand cubic meters ($2.32 per mmBtu).

Price of APM, or the gas produced from fields given to ONGC and OIL on nomination basis, is proposed to be raised in stages to Rs 7,500 per thousand cubic meters or $4.2 per million British thermal unit by 2013.

The proposal would be put to the Cabinet after comments from ministries like Finance, Power and Fertiliser are obtained, he said.

"I cannot give a timeframe... Consultations are on," he said.

Sources said the note based on the recommendation of the Tariff Commission, proposes that ONGC be paid Rs 3,875 per thousand cubic meters for the gas it produces while Rs 4,315 would be paid to OIL. Consumer price would be 10 per cent higher than this.

The differential between the producer and consumer price would be invested by the companies in new technologies.

Sources said the proposed prices are in line with the Tariff Commission recommendation, which in 2005 suggested a producer price of Rs 3,600 per thousand cubic meters to ONGC and Rs 4,040 per thousand cubic meters to OIL. On top of this, the price would change by Rs 55 per thousand cubic metre for every 10 points change in Wholesale Price Index (WPI).

Based on the rise in WPI, the producer price currently comes to Rs 3,875 for ONGC and Rs 4,315 for OIL.

The rates proposed do not include royalty paid by these firms to the Government.

All natural gas produced from nominated gas fields (excluding new fields) will be treated as APM gas, while the fuel produced from new fields would be allowed to be sold at the market price.