Petrol Stop - Govt may hike rate of natural gas produced by ONGC, OIL

Govt may hike rate of natural gas produced by ONGC, OIL

Tuesday, 19 January 2010

20 Jan 2010;dailypioneer.com:New Delhi: The Government may for the first time in about five years raise price of natural gas produced by state-owned firms like Oil and Natural Gas Corporation after the Finance Ministry and the Planning Commission backed the proposal for a 30 per cent hike. The Oil Ministry has circulated a Cabinet note for raising price of gas under administered pricing mechanism (APM) from Rs 3,200 per thousand cubic meters ($1.79 per mmBtu) to Rs 4,142 per thousand cubic meters ($2.32 per mmBtu). Price of APM, or the gas produced from fields given to ONGC and OIL on nomination basis, is proposed to be raised in stages to Rs 7,500 per thousand cubic meters or USD 4.2 per million British thermal unit by 2013. “Power and fertiliser ministries are against the hike but Finance Ministry and the Planning Commission are backing the proposal,” a Petroleum Ministry official said. “The plan will be put before the Cabinet for approval in 3-4 weeks time.” The official said the note based on the recommendation of the Tariff Commission, proposes 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. Consumer ministries of power and fertiliser feel that the hike would result in increase in feedstock cost but finance ministry and Planning Commission were of the opinion that it would remove distortions in the market.