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The revised gas price of $5.61 a unit (measured in million British thermal units), up from $4.2 a unit now, may not be adequate to encourage explorers.
But, along with incentives offered for deep-sea exploration, it may be attractive enough, said C Rangarajan, former chairman of the Prime Minister’s Economic Advisory Council.
Earlier, a panel under Rangarajan, set up by the UPA Government to determine the gas price, had proposed a formula that would have raised the price to $8.4 a unit.
The Rangarajan formula was based on the average of two prices — price at other producing destinations and the volume-weighted price of the US’ Henry Hub, the UK’s NBP and Japan Custom Cleared.
The new formula takes into account gas consumption in the US, Mexico, Canada, the European Union and Russia.
“Basically, the principle underlying our formula has been accepted.
“But apparently, they have taken other factors also into account, which I do not know the details of.
“It appears that they have provided some incentives for exploration in deep sea as well. That will mean an extra to the explorers besides the price fixed, which may make the pricing attractive enough,” Rangarajan said.
Japan does not matterSpeaking to reporters on the sidelines of his lecture on Indian Economy in Chennai, he said even removal of Japan from his pricing formula would not matter much.
“Even in our formula, Japan had a very small weight. But Russian and Canadian hubs were included in the new formula, which is good enough.”
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