A panel appointed by the Prime Minister has recommended that the price of natural gas produced in India be determined by a formula based on international prices and the cost of imported liquefied natural gas (LNG), instead of market discovery as used now.  The panel, headed by the chairman of the Prime Minister's Economic Advisory Council, C Rangarajan, has also recommended a competitive bidding process for revenue sharing between the government and private contractors. The production sharing contract (PSC) followed now allows the contractor to recover costs before sharing revenues.

The panel report was made public on Wednesday. It suggested that the average of the US, Europe and Japanese hub or market prices be calculated, which could then be averagedout with the netback price of imported liquefied natural gas (LNG) to determine the sale price of locally sourced gas.

Amid a row over CAG audit of Reliance Industries' KG-D6 gas block, the panel has recommended that Comptroller and Auditor General (CAG) select blocks on the basis of financial size. “The CAG will do direct auditing of blocks of higher value, whereas CAG-empanelled auditors will audit blocks of lower value,” it said.