NEW DELHI: The NDA Government on Wednesday said that it will come out with a new natural gas pricing formula by the end of September this year. Till then, the $4.2 per mmBtu price will continue.
Replying to a question in the Rajya Sabha, Oil Minister Dharmendra Pradhan said that the new pricing formula will be brought out keeping in mind the recommendations of the Parliamentary standing committee to ensure interests of the investors and the public.
The current gas pricing was fixed under the New Exploration Licensing Policy in 2007 and would cease to exist after March 2014. But a committee headed by economist C Rangarajan had presented a formula to fix domestic gas prices and the then UPA government had decided to apply this formula from April 1, 2014.
Parliamentary Standing Committees on Finance as well as Petroleum had called for a review of the formula suggested by the panel saying gas price should have some linkage with the cost of production.
According to the Oil Ministry, the cost of gas production varies between $1.86 per mmBtu to $4.31 per mmBtu but a cost-plus price would be perceived negatively by the market.
The Rangarajan formula suggested doubling of natural gas prices to $8.4 per million British thermal unit, an increase that would jack up urea production cost, electricity tariff and CNG rates.
Every dollar increase in gas price will lead to a Rs 1,370 per tonne rise in urea production cost and a 45 paise per unit increase in electricity tariff (for just the 7 per cent of the nation’s power generation capacity based on gas).
Also, there would be a minimum Rs 2.81 per kg increase in CNG price and a Rs 1.89 per standard cubic metre hike in piped cooking gas.
But the increase in gas price would bring windfall for the government — about $2.08 billion (Rs 12,900 crore) from additional profit petroleum, royalty and taxes accruing from doubling of gas rates, the ministry estimates.
‘Won’t Entertain FDI in Multi-brand Retail’
Unwilling to divert from their election manifesto promise, the government said that it will not ‘entertain’ foreign direct investment (FDI) in multi-brand retail.
Nirmala Sitaraman, Minister of State for Commerce, said in the Upper House that the reason they were in power was due to the assurances about not entertaining FDI in retail. “The mandate given to government is on the basis of our manifesto, we do not entertain FDI in Multi Brand Retail,” she was quoted as saying.
(With agency inputs)