PM meets Pradhan, Jaitley over gas price revision

Prime Minister Narendra Modi on Sunday met Oil Minister Dharmendra Pradhan for the second time in three days, apparently to hammer out an acceptable increase in natural gas prices that could be announced soon.

After nearly five hours of discussion on issues facing energy sector on Friday, Modi again called a meeting with Pradhan. Finance Minister Arun Jaitley was also present at the meeting.

Sources said at the Friday meeting the gas price revision was flagged as one of the immediate decisions the new government needs to take to revive investor interest in the stagnant oil and gas sector.

While the new government is keen to take an early decision on the issue, it may be looking at moderating the proposed increase - from the current $4.2 a million British thermal unit to $8.4, they said adding a new rate may be announced as early as this week.

Oil and gas producers say the current rate is not enough to help produce from new finds in deepsea but a new formula that had been approved by the previous government will result in increase in electricity rate, urea cost, compressed natural gas rates and piped cooking gas price.

Given that inflation is already high and recent rise in food prices in anticipation of below-normal monsoon will add to it, the new government is debating if gas rates should be revised now and add further to inflation, they said.