The government is likely to hike natural gas prices from July 1 after a new price formulation is approved by the Cabinet, a senior petroleum ministry official said on Thursday.
The first increase in natural gas prices, based on a formula suggested by a committee headed by C. Rangarajan, was to be originally effective from April 1. However, before the new price could be announced, general elections were announced and its implementation got deferred.
The official said that a decision on the price hike needs to be taken before July 1. The ministry, which had informed Reliance Industries on April 21 to sell natural gas from its eastern offshore KG- D6 fields at the old rate of $ 4.2 per million British thermal unit even after its term had expired, said that a new rate would be announced by July 1.
"We had told RIL that the earliest possible date for applying the revised price is July 1 and so we have to announce a new price before that," the official said.
The ministry will announce a new rate once it gets clarity on implementation of the Ranagarajan formula, which would double the gas price, from the top.
According to sources, a Cabinet decision may have to be taken in the matter. The ministry is expected to make a presentation on the issues pertaining to the oil and gas sector to Prime Minister Narendra Modi and a clear direction on how to proceed on gas pricing will emerge after that.
If the Prime Minister gives a go ahead for announcing a new price in accordance with the Rangarajan formula, approved by the previous government in December last year, an announcement will be made forthwith. However, if it is felt that the formula needs some adjustment or the government needs to take steps to protect interests of users in power and fertiliser sector, then consultations at the level of Cabinet may happen. Before being voted to power, the BJP had stated that it would like to review the formula if it comes to power.
Courtesy: Mail Today