New Delhi, March 13: The government has sought the approval of the Election Commission before notifying the new gas price to be effective from April.
“The new price will have to be notified before April 1. The approval of the Election Commission is being sought as the model code of conduct is in force,” a senior oil ministry official said.
Oil secretary Saurabh Chandra has met chief election commissioner V. S. Sampath before the announcement of the price next week.
Officials said Chandra submitted papers pertaining to the new gas pricing formula. The formula, recommended by the C. Rangarajan committee, was approved by the cabinet months before the code of conduct for the upcoming general elections came into force.
According to the formula, domestic gas will be priced at an average of imported LNG and international hub rates and will be effective from April 1.
The price, which will change every quarter based on the 12-month average of global rates and LNG import price with a lag of one quarter, will apply to all gas produced by both public sector firms such as ONGC and private companies such as Reliance Industries Ltd.
The price for April-June 2014 will be calculated based on the averages for the 12 months ended December 31, 2013 and is likely to be around $8 per mBtu against $4.2 per mBtu now.
Officials said following the price announcement, the bank guarantee that RIL would have to provide would also be indicated.
On December 20, the cabinet had decided to allow RIL to almost double the price of gas from April, provided it gave a bank guarantee to cover its liability if gas hoarding charges were proved.
The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 fields in the eastern offshore KG-D6 block since 2010-11.
The commerce ministry has sought the approval of the Election Commission to move ahead with its proposal to liberalise the foreign direct investment policy for railways.
The department of industrial policy and promotion (DIPP) under the ministry has proposed to relax the FDI policy in certain railway sectors.