Price of natural gas was revised last in June 2010

With the Cabinet Secretariat returning the proposal of the Petroleum Ministry for raising the domestic natural gas prices from the present $4.2 per million metric British thermal unit (mmBtu) to almost double arguing that A. K. Antony-led Empowered Group of Ministers (EGoM) was not empowered to take such a decision, the Government, on Wednesday, indicated that the matter would more likely to be put up for consideration of the Cabinet Committee on Economic Affairs (CCEA).

Petroleum and Natural Gas Minister Veerappa Moily, on Wednesday, said the matter was likely to be put up before the CCEA shortly. The Cabinet Secretariat had stated that the EGoM, led by Mr. Antony, was only empowered to take decisions on allocation of gas for various sectors, and the pricing mechanism was not part of its agenda. “If the Petroleum Ministry wants the EGoM to take a decision on this issue, they should amend the terms of reference of the EGoM giving it powers to take a decision on pricing of natural gas otherwise the Petroleum Ministry should move a Cabinet note for the consideration of the CCEA,” the Cabinet Secretariat wrote. The Petroleum Ministry had sent a draft proposal for the consideration of the EGoM to price all domestically produced natural gas as per the formula suggested by the Rangarajan Committee. The EGoM was originally constituted in 2008 to consider commercial utilisation of natural gas Reliance Industries had planned to produce from Eastern offshore KG-D6.

The present EGoM was different from the EGoM led by former Finance Minister Pranab Mukherjee which had fixed the $4.2 per mmBtu price for KG-D6 gas in 2007. The Terms of Reference (ToR) of this EGoM were to decide on pricing of gas produced from New Exploration Licensing Policy (NELP) blocks, and it ceased to exit at the end of the term of UPA-I in May 2009. On the other hand, the EGoM on gas utilisation was re-notified. Its terms of reference were to consider and decide issue of commercial utilisation of gas under NELP and other related matters.

The last time price of natural gas produced by state-run Oil and Natural Gas Corporation (ONGC) and Oil India Limited from fields given to them on nomination basis, called the administered or APM gas, was revised in June 2010 to $4.2 per mmBtu from $1.79 by the CCEA.