Global Ratings Agency Moody’s had warned that the Modi government’s decision to hold steady natural gas prices for three more months could halve the increase in revenues for this year for both Reliance and ONGC. It also warned that the development is credit negative for Reliance Industries and Oil and Natural Gas Corporation (ONGC).
“The Indian government’s decision to delay, by a further three months, the increases in domestic natural gas prices will halve the increase in revenues for fiscal year ending 31 March 2015 that upstream producers would have achieved if the price hikes were implemented from 1 April 2014,” Moody’s said in a release from Singapore.
If prices had risen from 1 April 2014 from the current $4.20 per million British thermal units (MMBTU) to $8.0-$8.4 /mmbtu, as had been notified by the UPA government earlier, Moody’s estimates, the ONGC’s revenues for the fiscal year ending 31 March 2015 would have risen by about $3.3 billion-$3.7 billion. Similarly, Reliance Industries’ revenues would have grown $400 million-$450 million over the same period, the agency said.
