In a setback to gas producers like Reliance Industries (RIL), the PM Narendra Modi-led government today postponed revision in natural gas prices by three months pending a "comprehensive" review to make a controversial pricing formula more palatable.
The current USD 4.2 per million British thermal unit rate for gas, which would have jumped to USD 8.8 if a formula approved by the previous UPA government was implemented on July 1, will continue till September-end, Oil Minister Dharmendra Pradhan said here.
The first revision in rates in four years was originally to take effect from April 1 but with general elections being declared it was postponed by three months.
"The Cabinet Committee on Economic Affairs today decided that comprehensive discussions were necessary on the issue. It was decided that consultations would be held with all stakeholders and it was important to keep public interest in mind," he told reporters after the CCEA meeting.
Pradhan, who had held three rounds of discussions with Prime Minister Narendra Modi on the issue since Friday, did not say if a new expert committee or a ministerial group will be constituted for the review.
In course of these discussions, it was clear that the new government was looking at making some changes in the formula, proposed by a panel headed by C Rangarajan, as it would have led to Rs 2 per unit increase in power tariff and Rs 12 a kg hike in CNG rates besides jump in fertiliser subsidy outgo.
Finance Minister Arun Jaitley said a review mechanism will have to be decided by the Prime Minister's Office and the Oil Ministry.
"There have been one or two meetings. The mechanism in the government which will review the whole thing and come to an opinion, I think now needs to be finalised," he said.
Neither Pradhan nor Law Minister Ravi Shankar Prasad who briefed media persons on the cabinet decision, would say if a new formula altogether was being considered or whether the Rangarajan formula will be amended to bring down the rates to acceptable levels.
"The matter needs extensive consultations keeping the public good in mind with all the stakeholders... the new government must be given time to take a call on what should be the mechanism (of review)," Prasad said.
The postponement will be a setback of gas producers like RIL