The Telegraph
Since 1st March, 1999
Email This Page
Fixation of gas price delayed

New Delhi, Jan. 29: The Group of Ministers (GoM) set up to fix natural gas prices met here today to assess the impact of the proposed price hike on the power and fertiliser sectors — both of which are vital to the economy. The GoM headed by Planning Commission deputy chairman K.C. Pant gave the petroleum, power and fertiliser ministries a 14-day deadline to narrow down their differences on the issue. The GoM will then proceed further with the task of formulating the natural gas pricing policy.

Sharp differences between the petroleum ministry, on the one hand, and the power and fertiliser ministries, on the other, came to the fore again over the move to raise natural gas prices.

The power and fertiliser sectors consume close to 80 per cent of the natural gas produced in the country.

The fertiliser and power ministries feel that any price of natural gas above $ 3-3.5 per million British thermal units will make the fertiliser industry and power units unviable.

The petroleum ministry has been supporting the ONGC and OIL demand to move to a market-determined regime to make these companies globally competitive.

The power ministry criticised the petroleum ministry for clearing the proposal for a sharp increase in the price of natural gas on the basis of US and European prices where it is a freely-traded commodity. Instead, it came out in favour of benchmarking it with natural gas prices in the Gulf which were regulated.

ONGC chairman Subir Raha and Gail chairman Prashanto Banerjee are reported to have made presentations at the meeting.

The thrust of Raha’s argument was that the government decided in 1997 to move to market determined prices for natural gas in five years. Linking the price to a basket of fuels was considered as the mechanism to progressively move to market-determined prices.

Email This Page