Date:31/01/2008 URL: http://www.thehindu.com/2008/01/31/stories/2008013161441300.htm

National

Petroleum Ministry for 16 % hike in natural gas prices

Sujay Mehdudia

NEW DELHI: In a step that could have an adverse impact on the costs of power generation and fertilizer production, the Ministry of Petroleum and Natural Gas has recommended a 16 per cent increase in prices of natural gas produced by Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL).

According to a proposal submitted for Cabinet consideration, the Ministry has sought indexing of prices to the inflation rate. This could generate additional revenue for the two firms.

The Ministry has proposed raising prices under the Administered Price Mechanism of the natural gas produced by ONGC from its fields on a nomination basis of Rs. 3710 per million standard cubic metres (MSCM) and Rs. 4150 per MSCM for all India.

A Cabinet note says that the price is to be changed by Rs. 55 per MSCM for every 10 points change in the Wholesale Price Index. The change will be made by the Ministry as and when necessary.

The note says that the consumer price for the power and fertilizer sectors outside North-east could be fixed at 10 per cent above the producer price – Rs. 4081 per MSCM.

The price for the two sectors for North-east could be fixed at 60 per cent of the price for general consumers – Rs. 2449 per MCSM.

The price for transport and small consumers outside the North-east could be 20 per cent above the price for the two sectors at Rs. 4897 per MSCM.

For the North-east, it could be 60 per cent of the price for general consumers at Rs. 2938 per MSCM.