'Multiple issues forced govt to defer revision of gas price'

Faced with multiple issues, including the impact on power and CNG rates, the new government chose to postpone revision in natural gas prices by three months, officials said today.
The revision in natural gas prices based on a formula approved by the previous UPA government has been a contentious issue, with two PILs pending in the Supreme Court against raising of rates and an FIR pending in Delhi's Anti Corruption Bureau.
Also, the Parliamentary Standing Committee on Finance and the Standing Committee on Petroleum had made adverse comments on the formula, they said.
The new government felt that doubling of current gas rates of USD 4.2 per million British thermal unit will result in hike in rates of fertilizer, electricity, piped cooking gas and CNG.

If the government decided to insulate the general public from the price rise, then there would have been substantial increase in burden of subsidy, the officials said.
Also, the previous government had conditioned applicability of the price revision to eastern offshore KG-D6 gas only if its operator Reliance Industries submits bank guarantees equivalent to the increased revenue it would get from higher rates.

This bank guarantee would have been encashed if it was proved that RIL deliberately cut KG-D6 output in anticipation of a higher gas price.
Considering all these issues, the Oil Ministry yesterday had moved a note for the consideration of the Cabinet Committee on Economic Affairs (CCEA) seeking "comprehensively" re-examining the whole issue before a decision is taken, they said, adding the CCEA meeting later in the day went by the ministry's suggestion.

The CCEA agreed to defer price revision by a quarter till September 30.
All prices prevailing for domestically produced gas including gas from block KG-DWN-98/3 or KG-D6 of RIL will continue till then and the contractors shall enter into gas sales agreements accordingly, they said.