Cabinet defers decision on gas price hike

The gas price hike, aimed at attracting investment in oil and gas in the country, is being opposed in some quarters

The Cabinet Committee on Economic Affairs (CCEA), on Friday, deferred the decision on the proposed gas price hike from the present price of $4.2 mbtu to $6.775 mbtu as Petroleum and Natural Gas Minister Veerappa Moily was away on an official tour.

The gas price hike had been listed in the additional agenda late last evening.

“The Cabinet note was there... the Minister (Mr. Moily) was unavoidably called to Agartala. Therefore, he requested deferment. It is deferred by a few days,” Finance Minister P. Chidambaram told reporters here on Friday. Sources in the Petroleum Ministry, however, discounted reports that the CCEA note on gas price hike had been withdrawn— asserting that when the note had reached the Cabinet after all approvals, there was no question of withdrawing it.

“The price hike proposal will come up before the CCEA next week, and we will address the issue,” Mr. Chidambaram said.

The gas price hike, aimed at attracting investment in oil and gas in the country, is being opposed in some quarters as it would lead to a rise in the cost of generating electricity and urea production.

“People will invest only when they get the right price. And production will increase only if there is investment. All these things will be taken into account when the CCEA takes a decision,” he added.