The ministry of petroleum and natural gas has approached the Election Commission (EC) for approval to double natural gas prices from the current $4.2 per million British thermal units (mBtu) to $8.2-8.4 an mBtu from April 1.
According to sources, the EC might also look into the Cabinet decision ensuring a higher gas price for the Mukesh Ambani-led Reliance Industries through a bank guarantee. While the Cabinet Committee on Economic Affairs had cleared a formula recommended by the Rangarajan Committee in June last year, it again in December decided to allow RIL a higher gas price, if the latter gave a bank guarantee for shortfall in production from the KG-D6 block and sign a supplementary agreement with the government for the new dispensation.
The guarantee will be encashed if proved that the company hoarded gas from the D1 and D3 fields in the KG-D6 block.
The new prices would be announced by the end of this month and Petroleum Secretary Saurabh Chandra is in touch with Chief Election Commissioner V S Sampath for consent, as the pre-election code of conduct is in place. The EC had on March 5 announced a nine-phase election starting April 7, to May 12 for a 16th Lok Sabha.
The Rangarajan panel had submitted its report in January 2013. The committee had proposed the pricing policy by taking an average of the US, Europe and Japanese hub and then averaging it out with the net back price of imported liquefied natural gas (LNG) to give the sale price of domestically-produced gas.
A separate committee would look into the pricing, which would be decided on a quarterly basis, taking into account of the 12-month average of global rates and LNG imports. There were technical difficulties in giving the higher gas price for other partners of RIL, like BP and Niko Resources, on which the ministry is likely to take a call by next week. RIL had scaled down its two-phase Capex plan for the D1 & D3 fields from $8.836 billion (proposed in 2006) to $5.928 billion. The total shortfall in production by RIL from KG-D6 in the last four years was 154 million standard cubic metre per day.