End-September deadline for announcing new gas price

Domestically produced gas would continue to be priced at the rate prevailing on March 31 last pending a comprehensive review of the gas pricing guidelines notified by the previous government, parliament was informed Thursday.

"The Domestic Natural Gas Pricing Guidelines, 2014 will be kept in abeyance up to 30.09.2014 and till that time, the domestically produced gas would continue to be priced at the rate prevailing on 31.03.2014," Petroleum Minister Dharmendra Pradhan told the Rajya Sabha in a written reply.

In this connection, a petroleum ministry source told IANS that it has sent a proposal for a new committee on gas pricing for approval to the Prime Minister's Office, that would elaborate an alternative formula to that suggested by the C. Rangarajan panel that had been constituted by the earlier UPA government.

In this proposal to the PMO, the ministry has suggested a deadline of end-August for completing discussions with gas producers as well as consumers such as urea and power plants.

The Cabinet Committee on Economic Affairs had on June 25 decided to defer implementation of the Rangarajan formula, which would have likely doubled gas prices to over $8 per unit, till Sep 30 and come up with a new regime by Oct 1.

The source said the panel would be asked to take into consideration the concerns of the power and fertilizer ministries about the impact of the steep hike recommended by the Rangarajan committee.

Among the options being considered is rupee-pricing of gas, as has been suggested by Finance minister Arun Jaitley, so as to cushion prices against foreign exchange volatility, the source said.