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Gas price review panel submits report
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SME Times News Bureau | 18 Sep, 2014
The four-member Committee of
Secretaries (CoS) set up by the government to review the gas-pricing
formula has submitted its report to the petroleum ministry.
Petroleum
minister Dharmendra Pradhan will examine the report before it is placed
before the cabinet, a ministry source told IANS Wednesday.
"The report has been signed and submitted. The recommendations on pricing are not being disclosed right now," the source added.
The
government last month constituted a committee comprising the
secretaries of power, fertilizer and expenditure with Rajive Kumar,
additional secretary in the petroleum ministry, as its member secretary.
The committee has held discussions with representatives of both gas producers and consumers on the issue.
Sep 30 is the deadline for announcing the new gas price.
A
final decision on pricing, however, may be further delayed due to
assembly elections in Maharashtra and Haryana next month, the official
told IANS..
The committee's brief is to examine the whole range
of issues related to gas pricing, including the Rangarajan Committee
formula, which was approved by the previous UPA government but could not
be implemented as the Election Commission barred price announcement in
the period leading up to general elections.
A new price based on
the Rangarajan Committee formula would have most likely doubled the gas
price to $8.4 per unit from April 1.
The Cabinet Committee on
Economic Affairs on June 25 decided to defer implementation of the
Rangarajan formula till Sep 30 and come up with a new regime by Oct 1.
The
Mukesh Ambani-led Reliance Industries (RIL) and its partners British
oil giant BP and Niko Resources have served an arbitration notice on the
government on revising their gas price, which expired on March 31 this
year.
The oil ministry, on the other hand, has imposed a penalty
on the company for failing to meet output targets from RIL-led
consortium's D-1 and D-3 fields in the KG-D6 eastern offshore block to
the extent of 1.9 trillion cubic feet of gas.
There has been
opposition to the Rangarajan formula from various quarters on account of
its likely impact on electricity tariff, urea cost, CNG rates and piped
cooking gas price.
Every dollar increase in gas rates will lead
to a Rs.1,370 per tonne rise in urea production costs and a 45 paise per
unit increase in electricity tariff. There would be a minimum Rs.2.81
per kg increase in CNG rates, and a Rs.1.89 per standard cubic metre
hike in piped cooking gas cost.
Meanwhile, a committee led by
former finance secretary Vijay Kelkar has recommended market-linked
pricing for domestic natural gas.
A consultation paper sent to
the petroleum ministry by the Kelkar Committee, formed by the previous
UPA government last year to suggest a roadmap for cutting import
dependency in the hydrocarbon sector by 2030, has suggested market
determined pricing for natural gas to make new exploration and
production activities viable.
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