Financial Daily from THE HINDU group of publications
Thursday, Apr 04, 2002
Industry & Economy - Disinvestment
IPCL sell-off on course -- Row over gas pricing resolved
NEW DELHI, April 3
THE row over the pricing of gas supplied by GAIL and ethane and propane supplied by ONGC to IPCL's plants at Gandhar and Nagothane respectively was resolved at a high-level meeting here on Tuesday, putting the IPCL disinvestment process on course for a conclusion this month.
According to the decision, GAIL will supply gas to IPCL's Gandhar plant at the price determined by the Government (currently Rs 2,850 per 1,000 standard cubic metre of gas).
This implies that the present gas price would continue for the Gandhar plant until it undergoes a change as and when the Government revises the prices, the Union Minister for Petroleum and Natural Gas, Mr Ram Naik, announced after the meeting.
In the case of IPCL's Nagothane plant, ONGC will supply ethane (C2) at the price of natural gas till 2006 and thereafter at market-determined prices. For the same plant, ONGC will supply propane (C3) at international prices. "Whatever is the international price, it would be linked to that," Mr Naik said.
The new pricing formula would be effective from April 1, discarding the earlier formula based on the Bureau of Industrial Costs and Prices' (BICP) recommendations.
"The agreement reached today is to the satisfaction of IPCL, ONGC, GAIL and others involved in the deal," Mr Naik stated. According to Mr Shourie, the price differential using the earlier method and the new one would be "marginal in the end."
"Everybody is satisfied with the formula as IPCL will receive natural gas like any other customer at the price determined by the Government," Mr Shourie stated. Officials said that the price of gas so far supplied by ONGC at Rs 5,700 per 1,000 standard cubic metres to the Nagothane plant would be reduced by half to Rs 2,850 per 1,000 standard cubic metres.
The agreement over the pricing of gas was reached at a meeting held here on Wednesday between the Union Minister for Disinvestment, Mr Arun Shourie, the Petroleum Minister, Mr Naik, and the Union Minister for Chemicals and Fertilisers, Mr S.S. Dhindsa.
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