Price hike for gas produced in India on cards

An inter-ministerial panel on Wednesday agreed to raise the price of domestically produced natural gas for industrial users. Paradoxically, the move is aimed at making liquefied natural gas imported from Australia affordable. 

The ministerial panel's decision will, however, be vetted by a group of ministers (GoM) following opposition from power ministry officials.

The panel, headed by a Planning Commission adviser, agreed to have uniform pricing for natural gas. While domestic gas is sold at $4.2 and $5.25 per million British thermal units, depending on whether it is for a priority sector or otherwise, LNG imported by Gujarat State Petronet Ltd from Australia cost about $16 a unit.

Attempts to average the price are being opposed by power sector users who will have to pay higher rates, and who point out that Australian imports are costlier than spot rates. Officials said the GoM could recommend a larger study, which would look at averaging the rates of all natural gas, domestic or imported.

LNG imported from Qatar on a long-term contract costs about $6.92 a unit. Spot prices of natural gas are at $11-12 a unit.

The price of natural gas for consumers in sectors such as steel and petrochemicals was hiked last December by 10 per cent for the fuel sold by state-owned producers Oil & Natural Gas Commission (ONGC) and Oil India Ltd. The price for these two sectors was raised to $5.25 per mBtu compared with $4.2 charged from priority sectors such as power and fertiliser.