NDA puts off gas price hike
The decision to hike gas price has been postponed by 45 days
By : DC Correspondent
Update: 2014-09-25 01:02 GMT
New Delhi: The BJP-led NDA government has postponed a decision on hiking prices of domestically produced natural gas by another 45 days to November 15. This is second time that Modi government has shied away from taking a decision on price revision on natural gas. In June, Cabinet had postponed a decision to hike the price of natural gas by three months. Any decision to hike prices would have been exploited by the opposition parties in the forthcoming assembly election in key states of Maharashtra and Haryana to be held in October.
The decision to postpone gas prices will be negative for Mukesh Ambani led Reliance Industries, who would have benefited from any upward revision. Earlier, UPA government had accepted a C. Rangar-ajan committee formula which had sought to double the price of natural gas prices from domestic oil fields from 1 April 2014.
Under this formula, gas prices would have increas-ed from current $4.2 per million British thermal unit to $8.4 (mmBtU). However, this decision to increase price could not be implemented as the code of conduct set in due to general elections. So now Modi government has to take a decision on the pricing issue. Oil companies are claiming that the current price of $ 4.2 per mmBtu is not enough to help produce from new finds in deep-sea.
In August-end, the government constituted a four-member panel of secretaries to review the formula. Last week the committee submitted its recommendation on a new pricing mechanism.