The government has formed a four-member secretaries? committee to review the vexed issue of pricing domestic natural gas.
The committee includes power secretary PK Sinha, expenditure secretary Ratan P Watal, fertiliser secretary J K Mohapatra and additional secretary at petroleum ministry Rajive Kumar.
The committee would submit its recommendations in two-three weeks, said Kumar, adding that the issue would be ?re-examined comprehensively?by involving all major stakeholders.
The first meeting of the panel with stakeholders, primarily producers (oil and gas companies) and buyers (fertiliser, power, refinery and city gas), is scheduled for Monday, he said.
However, Kumar did not divulge if the panel would scrap the Rangarajan formula, which was approved by the previous UPA government, or try to put in place a new pricing methodology.
?The timelines have already been drawn (by the CCEA) and so the report will be submitted within a few weeks,? he said.
Last week, petroleum minister Dharmendra Pradhan while replying to questions in the Rajya Sabha, said that the decision on gas pricing will be taken keeping in mind the interests of investors and public and the formula will be announced by September 30.
On June 25, Prime Minister Narendra Modi-headed Cabinet Committee on Economic Affairs (CCEA) decided to defer a decision on the Rangarajan-formula based new gas pricing regime by another three months till October 1.
It is yet to be seen if the model code of conduct implemented by the Election Commission would again play spoilsport as the process for some state elections is expected to begin by September-end or October.
Elections are scheduled to be held in Haryana, Maharashtra, Jharkhand and Jammu and Kashmir by the end of the year.
The Rangarajan formula was to be implemented from April 1 but was deferred by three months as the general elections were announced. The price would have nearly doubled from the prevailing $4.2/mBtu if the benchmarking was done as proposed by the panel.
Revising the gas price has serious repercussions for the economy as a whole and so warrants careful deliberations and prudent decisions.
If gas price increases by $1/mBtu, then per tonne increase in production cost of urea will be R1,369. Similarly, electricity tariff would go up by 50-60 paise.
A higher gas price for the current production would mean ONGC?s annual revenues would rise by R12,000 crore and OIL?s by R1,500 crore. For RIL and its partners, at the current KG-D6 output of 12-13 mmscmd, the annual revenue increase would be R3,000 crore.
Moody’s had projected a combined revenues of the upstream companies to rise by up to $2.8 billion had the price hike been implemented on April 1 as scheduled.
The increase in gas price would bring windfall for the government ? about R12,900 crore from additional profit petroleum, royalty and taxes accruing from doubling of gas rates, the ministry estimates.
Petroleum ministry prepares ground to boost CBM output
New Delhi: The petroleum ministry is planning to bring policy changes to boost natural gas production from coal-bed-methane (CBM) blocks to 10 mmscmd by 2017-18 from less than 1 mmscmd now. There are three major roadblocks for CBM exploration, said a senior ministry official. These include overlapping of CBM block area with coal mining area, fiscal regime and requisite clearances, as 81% of the area under CBM blocks is with Coal India. The ministry is holding inter-ministerial consultations and proposals would be put up to the Cabinet Committee on Economic Affairs for its nod. India has auctioned nearly 30 CBM blocks under four rounds. However, currently only two blocks (GEECL and Essar Oil) are producing insignificant volumes of the hydrocarbon. According to DGH, output from CBM blocks is expected to go up to 7.4 mmscmd by 2013-14, but it was not achieved. The total sedimentary area for CBM exploration in India is of the order of 26,000 sq km. Of this, exploration has been initiated in only 52% of the area. In other words, a large area remains to be explored, says the DGH website. fe Bureau
