Price of Natural gas should not be increased: Trade Body

As per a study by Chemical Industries Association, recommendations made by the Rangarajan panel had "several flaws"

A city based trade body, representing the chemical industries, today said the recommendations of the Rangarajan Committee set up during the UPA regime for fixing the price of natural gas had "several flaws" and that the price should not be increased.

As per a study undertaken by Chemical Industries Association, the recommendations made by the Rangarajan panel had "several flaws" and if implemented, it may do "more harm than good."

"Chemical Industries Association is of the view that the price of natural gas should not be increased", the study said.

Detailing some highlights of the study, Chemical Industries Association Secretary N S Venkataraman said: "The Rangarajan formula is flawed and illogical, as according to the formula, the price of natural gas would be arrived at based on estimates and not actuals. This would lead to a lot of legal disputes and controversies".

"The implementation of the government notification based on Rangarajan formula would result in near doubling of the gas price immediately, which would result in additional urea subsidy burden of around Rs 12,000 Crore every year to the Government", he saidI.

Indicating that if the price of the natural gas doubles from the present level,it would result in an additional price of Rs 2 per unit of power produced by gas based power projects.

"It takes at least four years for onshore gas exploration efforts and eight to nine years for off-shore gas exploration efforts to be completed. Why increase the price now when new gas would come only after five to nine years", he asked.

"The study has suggested that the government may subsidise investment in gas exploration efforts rather than giving subsidy for urea due to increase in the price of gas", he added further.