Cabinet to discuss price rise in nominated fields

Although the government has put on the backburner plans to revise prices of petrol and diesel, it is considering raising the administered price of gas produced from fields given by Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) on nomination. Gas prices were last revised in June 2005.

All natural gas produced from nominated fields, excluding new ones, will be priced through the administered mechanism. However, gas from new fields will be sold at market rates.

The producer price for ONGC’s gas will be increased to Rs 3,710 per million standard cubic metres (MSCM) and that of OIL’s gas to Rs 4,150 per MSCM from the existing Rs 3,200, according to a Cabinet note prepared by the petroleum ministry.

This apart, the note proposes to alter the price of gas by Rs. 55 per MSCM for every 10-point change in the wholesale price index. The tariff commission for gas had suggested Rs 3,600 per MSCM for ONGC and Rs. 4,040 per MSCM for OIL. However, since its recommendations, the wholesale price index has risen by 213.80 points.

Similarly, the consumer price for the power and fertiliser industries, the two main consumers of gas, has been set at Rs. 4,081 per MSCM outside the Northeast, where it is Rs 2,499 per MSCM, or 60 per cent of the price for general consumers.

The price for the transport industry and small consumers outside the Northeast has been proposed at Rs. 4,897 per MSCN, 20 per cent above the price for the power and fertiliser sectors. This is being done in line with a government move to gradually increase the prices of gas allocated to small consumers to reflect the market price.