Government to consider revision in gas pricing after November 30 based on Rangarajan panel's views
The government will consider revising prices of domestic gas produced after 2014 on the basis of the Rangarajan panel's recommendations, oil ministry officials said
"Recommendations of the Rangarajan Committee are not binding. Suggestions will be initially examined by the oil ministry and then placed before the committee," one official said, requesting anonymity.
In May, the government had constituted a committee headed under the Prime Minister's Economic Advisory Council's chairman, Dr C Rangarajan to suggest changes in existing oil & gas exploration contracts with private energy firms, to determine domestically produced natural gas price and modify existing profit-sharing mechanism, which according to the CAG favoured private companies.
The committee's recommendations for revision of prices will be applicable for gas produced after March 31, 2014, officials said. "Reliance Industries has also accepted that price of its KG-D6 gas will not change till that time," another oil ministry official with knowledge of the development said.
Reliance Industries said it was not seeking to revise gas price before 2014. "The company has been seeking clarity on the basis of gas pricing that will be adopted post March 2014," RIL executive director PMS Prasad said. The clarity is required for taking investment decisions in the project and to develop new discoveries, he added.
The company has requested the government to decide the basis or formula for future gas produced from the D6 block in advance as price discovery and approval would take time, he said. The current gas price of $4.20 per unit was also approved in 2007, about two years ahead of the first gas produced from the block, he added. An empowered group of ministers (EGoM) had approved the gas price in October 2007 and the first output from the block commenced in April 2009.
Oil ministry said in a statement on Wednesday that RIL's request for revising gas price was rejected in October, 2010 when Murli Deora was the oil minister. "It has been categorically stated that no revision of gas price can be considered before 2014,"the ministry spokesman said. The ministry's position on gas price revision was also clarified through a statement on Nov 1, immediately after Veerappa Moily assumed the charge of the ministry, he added.
Earlier this year, Reliance had proposed to raise the gas price because some customers offered to pay higher price, but did not pursue the matter. "RIL was obliged to bring the willingness of buyers to pay higher gas price, to the notice of the Government and seek its directions," Prasad said.
A draft EGoM note on revision of gas prices, prepared during the tenure of Jaipal Reddy, would now be reviewed by Moily and based on his inputs it could be re-submitted to the cabinet secretariat for inter-ministerial consultations, oil ministry officials said.