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HindustanTimes Sun,20 Apr 2014

Natural gas price set to double from $4.2/unit

Anupama Airy, Hindustan Times  New Delhi, May 14, 2013
First Published: 21:03 IST(14/5/2013) | Last Updated: 21:05 IST(14/5/2013)

Natural gas prices in the country are set to double from the existing $4.2 per unit levels. The Vijay Kelkar committee, set up by the government to vet the Rangarajan panel’s recommendations on pricing gas at around $8.8 per unit besides suggesting ways to reduce India’s increasing dependence on imported oil, gas and coal, is understood to be in agreement with the new price, a senior government official told HT.

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“The Kelkar panel may slightly trigger the proposed price of around $8.8 a unit but is also in agreement to an increase in gas prices, which has to be above $8 per unit,” the official said.

Government sources also revealed that besides endorsing Rangarajan panel’s recommendations, the Kelkar committee may even recommend a further revision of gas prices in a phased manner and spread over every two to three years.

Asked on the consequences as this will have a direct impact on power and fertiliser sectors as also other user industries thereby pushing up manufacturing costs, a senior petroleum ministry official cited instances where users from both the fertiliser and power industry have been purchasing imported LNG at between $15 to 20 per unit.

A final call on the new natural gas prices, to be effective from April 1, 2014, will, however, be taken by the empowered group of ministers (EGoM) on natural gas pricing expected to meet shortly.

“The gas pricing issue would be dwelled by the EGoM in a few months from now as another issue of giving equal priority status to power and fertiliser needs to be addressed first,” the petroleum ministry official added.

The recommendations of the Rangarajan panel and now the much awaited Kelkar committee on increasing the gas prices will have a substantial impact on the fortunes of Indian gas producers like Reliance Industries, GSPC, BP and Niko Resources.

Besides, a timely decision will also unlock billions of dollars of investments that are waiting to get invested by many companies pending a clarity on this important policy decision.

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