Gas pricing review panel seeks stakeholders' views by Thursday

The secretaries' panel on ascertaining the price of natural gas has asked all stakeholders to send their written views by Thursday to arrive at a decision by the September-end deadline.

During a meeting here with the panel, chaired by Power Secretary P.K. Sinha, oil operators were all in favour of a fair hike in the gas price to keep the capital-intensive operations of exploration and production of hydrocarbons profitable for both existing and new developments, officials said.

"The committee listened to the views of the stakeholders. It made no suggestions or any counter-arguments. But it has asked the participating firms to send their representation to the panel chairman," an official said.

Besides Sinha, those representing the panel who attended the session included Chemicals and Ferrilisers Secretary Jugal Kishore Mohapatra and Petroleum Additional Secretary Rajive Kumar. Expenditure Secretary Ratan P. Watal, another member, did not attend.

According to sources, some of the participants were of the view that the government can adopt the recommendations made by Sinha when he was additional secretary in the ministry of petroleum and natural gas.

"They (the participants) were unanimous in one aspect. The price of natural gas must be increased as it would impact on both their existing production and new development. They said a fair balance must be maintained benefiting all stakeholders," one source said.

The committee of secretaries had invited representatives of both producers and consumers Monday to discuss the issue. The Cabinet had on June 25 decided to defer implementation of the Rangarajan formula till Sep 30 and come up with a new regime by Oct 1.

The producers collective Association of Oil and Gas Operators, meanwhile, wrote a letter to the petroleum ministry saying the members were willing to accept the forumla of the C. Rangarajan Committee that was due to be notified by the previous government.

"The January 2014 notified domestic natural gas price guideline gives a lower price than what the operators deem as correct market price," said the association's letter written by its secretary general Ashu Sagar.

"Our members are willing to accept this as a first step in the move to a market price. This pricing mechanism needs to be implemented immediately," said the letter, adding that in tandem a comprehensive review of the pricing policy must also be undertaken.

It said when crude oil under the government's production sharing contract gets sold at internationally-benchmarked prices, described as "import parity pricing basis", there was a strong protest when the same logic is applied to gas prices.

The previous government had approved, but decided to defer, implementing the Rangarajan forumla on gas pricing on the advice of the Election Commission. Prime Minister Narandra Modi's government also deferred it till September-end for wider consultations.

There has been opposition to the Rangarajan formula from various quarters on account of its likely effect on electricity tariff, urea cost, CNG rates and piped cooking gas price.