Treading cautiously on the sensitive issue of domestically produced gas price, the Government has constituted a senior official-level panel to review the proposed new rates.

The panel comprises secretaries in ministries of power, fertiliser, expenditure, and additional secretary in Petroleum & Natural Gas Ministry has been nominated as the member secretary of the panel.

An official in the Petroleum Ministry said that the panel has been asked to give its comments by August 31, but the whole process may take more time. The first meeting of the panel will take place on August 25. The panel is also expected to discuss with all stakeholders including companies before giving its views.

The Government has to put in place the price of domestically produced gas on effective October 1 following a June 25 Cabinet Committee of Economic Affairs decision. The CCEA had deferred implementation of new gas price by three months (till September) on the grounds that the issue required more discussions and consultations with stakeholders.

At present, there are several gas pricing regimes in the country – administered pricing mechanism, market determined based on pricing schedule and guidelines issued by the Government, gas sold on formula approved by the Government, price derived at arm’s length principle, and pricing under the production sharing contract regime.

The current price, at which gas from various sources including coal bed methane, is being sold in the country ranges between $4.2/unit and $5.7/unit (excluding local taxes, marketing margins and transmission costs).

Due to political compulsions the present Government is taking steps cautiously, say industry observers.

The Government needs to decide on the price soon, if it wants to expand the reach of piped natural gas, as envisaged in the Budget.

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