Committee to submit report on gas price this week
Some of panel members wanted to link the price of gas with the cost of production, while others wanted new gas rates for new fields.
The report would be reviewed by oil ministry officials and petroleum minister Dharmendra Pradhan after he returns from Vietnam on Thursday. Subsequently, the ministry would send the proposal for Cabinet’s approval.
Official sources said that sharp differences in the panel of secretaries had narrowed. “Meetings of the committee is over and it is compiling the final report. In all likelihood, the committee will submit its report in about two days,” a source close to development said.
ET reported on September 11 that the panel will submit its report this week. The government last month constituted the panel to review the gas price formula proposed by the Rangarajan committee, which was approved by the UPA government.
The previous government, which had notified the new pricing mechanism in January this year, could not announce the rate after the Election Commission vetoed its move. The formula proposed to double gas price from $4.20 per unit to about $8.4 per unit from April 2014.
The Cabinet of the new government, which considered the pricing matter on June 25, decided to review the formula in public interest, and directed gas producers to continue selling gas at prevailing rates until September 30. The committee, which was expected to submit its report to the oil ministry on last Wednesday, could not do so because of several differences among its members.
Some of panel members wanted to link the price of gas with the cost of production, while others wanted new gas rates for new fields, sources said. The committee comprises expenditure, fertiliser and power secretaries.
The oil ministry is represented by its additional secretary, Rajive Kumar, who is also the member secretary for the panel. “Power ministry initially wanted a drastic change in the formula, but later it has also soften its stand,” the source quoted earlier said but declined to give details. “It is not proper to preempt the report because the draft may undergo changes before it is finalised,” the source added.
Oil and gas experts said they do not expect the panel to recommend a high price because of its composition. “Ministries of power and fertiliser are representing consumers and the department of expenditure is expected to protect government’s subsidy. In this situation, we don’t have high hopes from this panel,” one expert said requesting anonymity.