A move that will help shore up the annual revenues of Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), the petroleum and natural gas ministry has finally cleared the proposal to increase the regulated price of natural gas being sold by the two state-owned companies from blocks awarded on nomination basis.
The oil ministry has proposed a 31.25 per cent increase in regulated gas price to Rs 4.2 per cubic metre from the current Rs 3.2. The new price will come into effect retrospectively from Apr 1, 2009.
“The hike in regulated gas price has been approved by the petroleum minister, Murli Deora by over 31 per cent,” said a senior ministry official, requesting anonymity.
“The minister has approved it and now the note will be circulated in various ministries for comments.”
The official added that once the views of other ministries’ are received, the note will be put before the Cabinet Committee on Economic Affairs. “The entire process could take about a month,” he added.
With the hike in gas prices, ONGC will be able to start making profits in its gas business. ONGC, which sells around 47 million cubic metre of gas per day at regulated rates, has been seeking an immediate hike in prices. ONGC lost over Rs 3,000 crore in revenues during 2008-09 on sale of natural gas at regulated prices.
“The expected revenue inflow after the increase in APM prices will be close to Rs 2,000 crore,” ONGC Chairman and Managing Director, R.S. Sharma told Hindustan Times.