The government may soon raise prices of natural gas produced by state-owned ONGC and Oil India by as much as 30 per cent, Petroleum Secretary S Sundareshan said today.
"I am told by the (Petroleum) Minister (Murli Deora) that the issue is in the final stages of decision making in the government. We expect a decision soon," he told reporters on the sidelines of the 6th Asia Gas Partnership Summit here.
Price of gas produced by Oil and Natural Gas Corp (ONGC) and OIL from fields given to them on nomination basis were last revised in 2005. Current rates of Rs 3,200 per thousand cubic meters ($1.79 per million British thermal unit) are less than half of the $4.2 per mmBtu price of gas from KG-D6 field of Reliance Industries.
The Oil Ministry has circulated a Cabinet note for hiking price of gas under administered pricing mechanism (APM) to Rs 4,142 per thousand cubic meters ($2.32 per mmBtu).
Price of gas under APM is proposed to be raised in stages to Rs 7,500 per thousand cubic meters or $4.2 per million British thermal unit by 2013.
Sundareshan said the government was weighing policy options to end differential pricing of natural gas that ranges from under $1 per mmBtu (APM gas) to $5.73 per mmBtu (for gas produced by BG Group-operated Panna/Mukta and Tapti fields).
"Over the next few months we will explore further how to make all parts of the country get gas at approxmimately the same price," Sundareshan said indicating that price of gas from different sources may be pooled or averaged out to make it uniform for the consumers.
Under pooling of prices, the producers will get the price as per the production sharing contract between them and the government. But the consumer prices will be uniform irrespective of the source of gas.
Sources said the note on APM gas price increase was based on the recommendation of the Tariff Commission, which proposed that ONGC be paid Rs 3,875 per thousand cubic meters for the gas it produces while Rs 4,315 would be paid to OIL. Consumer price would be 10 per cent higher than this.
About 40 per cent of the nation's 140 million standard cubic meters a day of gas output is sold at administered rate. A hike in rates of these is an attempt to reduce distortions in a market with more than a dozen prices.
The government has set $4.2 per mmBtu as the sale price of gas from Reliance Industries' eastern offshore KG-D6 fields, while the gas from BG Group-operated Panna/Mukta Tapti fields is sold at $5.73 per mmBtu.
State-run ONGC lost a whopping Rs 4,745 crore in revenues on selling 17.71 billion cubic meters of natural gas at a rate below production cost in 2008-09.
