Plea not to hike natural gas price

Chennai: With the Union government mulling over an impending natural gas price hike based on the recommendations of the Rangarajan panel, Chennai-based Chemical Industries Association (CIA) has petitioned the Centre to reject the panel’s recommendations and not increase natural gas price.

The previous UPA government had issued a notification to implement the Rangarajan panel recommendation from April 1, 2014 which had been deferred due to the elections.  

“Rangarajan panel recommendation is illogical and flawed on several counts, including the basic parameters considered in the price revision formula,” said N.S. Venkatraman, secretary, CIA.

“The formula is based on several variables and therefore, it is bound to invite a lot of legal issues in interpretation,” he said.

Venkatraman pointed out that while the proposed price rise was to keep gas exploration efforts alive among other reasons, the ideas of gas price hike now when exploration results might take anywhere between four to 10 years did not make any sense.

The panel suggested pricing of all domestically produced natural gas at an average of the prices of imported liquefied natural gas (LNG) into India and the weighted average of gas prices in North

America, Europe and Japan has also drawn flak from industries here who questioned why China and South Korea, which were also top importers of natural gas were not considered.

The BJP had earlier stated that it would like to review the formula if it comes to power. “If the notification is implemented, it would result in almost doubling of natural gas price in India immediately and will further push the price at periodic intervals,” said Venkatraman.

Primary applications of natural gas include as fuel for generation of power, as feedstock for ammonia, fertilisers and methanol and as a transportation fuel. Natural gas is cheaper than LPG and can be used as piped gas for households.