In a move that would substantially increase the profits of gas producers, the petroleum and natural gas ministry has moved a note for the empowered group of ministers for nearly doubling the prices of domestic natural gas produced by Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) to around $8 to 8.5% in the current year itself and for private producers like Reliance Industries from April 2014.
The measure, if implemented, will hit the common man, besides fuelling inflation.
Doubling of domestic gas prices will have a direct impact on the cost of power and fertilisers — the two bulk domestic gas consuming sectors.
The hike will also result in a steep increase in the price of piped natural gas flowing into your kitchens and that of compressed natural gas (CNG) being used to run vehicles.
The move will also affect the cost of production of cement, steel and ceramics industry that uses gas as a feedstock.
The ministry has proposed a full acceptance of the Rangarajan Committee’s recommendation of pricing domestically produced natural gas at an average of global prices and the cost of imported LNG instead of the current mechanism of market discovery.
The ministry wants the new pricing guidelines to apply from 2013 on all domestically produced gas barring cases where it is either governed by the Production Sharing Contract or the government had previously fixed a tenure for the same.