In a clear indication that the Narendra Modi government is unlikely to accept the Rangarajan formula for pricing domestically produced natural gas, Minister of Petroleum and Natural Gas Dharmendra Pradhan said the price approved by the previous United Progressive Alliance government had not taken into account the end user’s capacity to pay.
The UPA government had approved an increase in the price from $4.2 to $8.34 per million British thermal units (mBtu) of gas, based on a formula by C. Rangarajan, Chairman of the Economic Advisory Council. On June 25, the Cabinet Committee on Economic Affairs decided to continue with the current price of $4.2 till September and take a final call on the matter after consulting all stakeholders.
Oil and Natural Gas Corporation Limited and Reliance Industries Limited are among the biggest producers of gas in India. Reliance Industries, the Centre’s contractor for the Krishna Godavari basin’s KG-D6 gas fields, had slapped an arbitration notice over the delay in the implementation of the higher rates on May 9, 2014.
“The Supreme Court has said that it is the State that owns the natural resource and the Prime Minister has said in Parliament that the poor of this country have the first right to its resources,” Mr. Pradhan told The Hindu on Friday.
Mr. Pradhan said as that per the CCEA decision, consultations are on with stakeholders to arrive at a price best suited to consumers but at the same time without risking business investments.
“We will listen to everyone. We are committed to ensuring that the interests of both the end-users and the producers are protected while fixing the price,” he said.
