New gas policy a positive for ONGC, RIL: S&P

Rating agency Standard & Poor's has said the new gas price mechanism is a positive for Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd (RIL)

Rating agency Standard & Poor's has said the new gas price mechanism is a positive for Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd (RIL)

India is set to usher the new pricing regime, based on a formula suggested by the Rangarajan committee, from April. According to the government, the price of domestic natural gas might almost double from the current $4.2 a million British thermal units (mBtu) to $7-8 an mBtu.

S&P’s Ratings Services expects the new mechanism to improve the cash flows and profitability of both ONGC and RIL. “We also believe the price increase will support the companies' high capital expenditure plans,” it stated on Tuesday.