Gas price at about $8; FM hints lowering price for fert, power

A day after the Cabinet approved nearly doubling of natural gas prices to about USD 8, Finance Minister P Chidambaram today hinted at moderating the price of fuel to power and fertilizer sectors so as to keep electricity and urea costs down.
The increase in current gas price of USD 4.2 per million British thermal unit will result in sharp rise in cost of producing power and fertilizer as well as rates of CNG for automobiles.
The Finance Minister said the Cabinet Committee on Economic Affairs (CCEA) had yesterday approved pricing of all domestic gas as per a formula suggested by a panel headed by Prime Minister's economic advisor C Rangarajan, to spur investments without which domestic production would have declined and imports have risen.

"The power and fertiliser ministries have raised the issue," Chidambaram told reporters briefing decisions of the CCEA.
"We can look at fixing the input costs for these sectors. The issues will be addressed in course of time," he said without elaborating.
Asked if his statement meant that the government will subsidise gas supplies to power plants and fertilizer units, he said the CCEA has given output price of gas producers and not the input price of consumers.

"Input price of gas will be fixed in course of time," he said.
While producers will get a price determined by the Rangarajan formula, user industries of power and fertilizer may get gas at lower price with government subsidising the difference.

Chidambaram said investments in India were declining and companies were investing abroad. In past 10 years, USD 27 billion investment has flown out and antoher USD 10 billion is in pipeline.