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The Ministry of Petroleum and Natural Gas (MoPNG) will “very soon” seek cabinet approval on the recommendations of the Kirit Parikh committee report on suggesting fair price of natural gas to the end-consumer.
“The report is under examination, but we will come out very soon,” Oil Minister HS Puri told reporters on Tuesday.
New pricing
Sources said that inter-ministerial consultation on the report have been completed, and is under consideration of the Ministry. The report will be sent for the approval of the Union Cabinet this month. Cabinet approval is required to implement the new pricing as the old policy will be in force till March 31. The pricing of natural gas is revised bi-annually.
The panel has suggested a floor price of $4 per million British thermal units (mBtu) and a ceiling price of $6.5 per mBtu for gas produced under the administered price mechanism (APM). At present, this price is $8.57 per mBtu till March 2023.
It has recommended not tinkering with natural gas prices from Deepwater, Ultra Deepwater and High Pressure-High Temperature (HPHT) fields such as in KGD6 run by Reliance Industries and BP, which at present is $12.46 per mBtu.
Simplyfying pricing and policy
Speaking to businessline last year after submitting the report to MoPNG, Parikh said that the rationale behind the exercise is that India has many gas fields with different pricing and policies. The report has tried to simplify this.
“It was done with three objectives. First, to increase gas share in our energy mix to 15 per cent by 2030. Second, we must provide fair prices to consumers. Third is to make sure prices do not affect government finances,” he had said.
From the consumer’s perspective, reduction in gas prices would result in a cut in CNG and PNG (domestic) prices by CGD players and would improve the conversion economics for the end consumers thereby stimulating demand.
Lower domestic gas prices would also reduce the government’s subsidy burden for fertilisers. Also, lower prices would lead to a more competitive cost of generation for domestic gas-based power generation projects.
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