Financial Daily from THE HINDU group of publications
Saturday, Aug 07, 2004

News
Features
Stocks
Cross Currency
Shipping
Archives
Google

Group Sites

Industry & Economy - Petroleum


Govt considering hike in natural gas price

Balaji C. Mouli

The Petroleum Minister, Mr Mani Shankar Aiyar, will have to contend with the views of the Government's alliance partners, the Left parties, who are likely to oppose the hike.

New Delhi , Aug. 6

THE Petroleum Ministry is reviving an earlier proposal for a hike in the price of natural gas supplied by Oil and Natural Gas Corporation (ONGC). If implemented, power sector consumers who account for 42 per cent of the natural gas consumption, will be burdened with an additional bill of Rs 550 crore.

The fertiliser consumers, who account for 34 per cent of natural gas consumption, will also bear the brunt.

The proposal, approved by a Group of Ministers (GoM) in July last year, proposes a Rs 350 per thousand cubic metres hike in domestic natural gas price as well as a Rs 10 per thousand cubic metres per day hike in transportation cost. The latter will accrue to GAIL (India) Ltd.

"ONGC has been pushing for a hike in gas prices. We are considering it actively. A presentation will be shortly made before the Petroleum Minister who will then decide on whether or not to take it up to the Cabinet for approval," an official said.

Although the GoM, which represented the user as well as producer industries, had firmed its recommendations for the approval of the Cabinet in July last year, the earlier BJP-led Government decided against considering it since the general elections were round the corner.

This time around, the Petroleum Minister, Mr Mani Shankar Aiyar, will have to contend with the views of the Government's alliance partners, the Left parties, who are likely to oppose the hike.

The price revision proposal, which was termed by the GoM as an interim compensation, if effected, will enrich ONGC by around Rs 1,500 crore per annum. The GoM had recommended that the final revision be made once the Tariff Commission, whose services were requisitioned by the GoM, puts forward its recommendations.

Currently, ONGC realises Rs 2,850 per thousand cubic metres for its natural gas, while GAIL nets Rs 1,160 per thousand cubic metres per day.

For the power consumer, the additional bill of around Rs 550 crore would be mainly borne by the northern States, where around 4500 MWs of gas-based power generation capacity operates.

For ONGC, the GoM recommendations if implemented, would bring in gains on three counts. A straightforward gain would be on account of the increase in price for its 61-odd million standard cubic metres of gas (mmscmd) production, netting a profit of around Rs 500 crore.

Secondly, ONGC buys gas from joint venture fields amounting to 9 mmscmd at market prices and sells it at a capped price of Rs 2,850 per mcmd to the consumer. Last year, the subsidy bill on this count worked out to Rs 950 crore. On this, the GoM has proposed that ONGC sells the entire joint venture production at market prices, save 1 mmscmd from the Ravva satellite fields in Andhra Pradesh. This gain would be of the order of around Rs 700 crore.

Another gain would arise on account of a lower obligation towards the gas pool account, which subsidises sale of gas in the north-eastern regions of the country. Currently, ONGC pays the account around Rs 250 crore. The GoM has recommended a limit of Rs 100 crore.

More Stories on : Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Stories in this Section
IMD plans district-level updates


Relief camps for flood-hit northern Kerala
Seminar on bio-fuels in Hyderabad
`Company in business has no brains or skills'
Inflation surges to 7.51 pc
Chidambaram calls for national model on delivery systems
Bond prices crash as panic grips market; rate hike feared
Inflation soars as vegetable, mineral prices rise
CII unveils agenda for clocking 8% GDP growth
Inflationary trend temporary: FICCI
Monsoon revival cuts deficit by 5 pc
Working group mooted to study linkages with Yunnan province
German machinery body to expand operations in India
Pakistani child to undergo liver transplant at Global Hospital
Seminar on diabetes in Thiruvananthapuram
Meet on HIV begins today
Kerala: CM's intervention sought on developmental projects
Govt considering hike in natural gas price
SC notices on cancer drug marketing rights
Govt backs desi pharma cos despite WHO salvo
KPTCL turns to hydel stations
Aircraft lease rentals: Assocham for review of tax proposal
AP increases sales tax on ATF to 30.55 pc
Textile stocks in limelight
Tussle for Coimbatore cluster may intensify
7-point CII agenda to put SMEs on their legs
Project Siruthuli bid to revive Noyyal river in TN
Telecast rights: BCCI may deal with broadcasters directly
CVAT graduates top NAC exams
NITK Surathkal to set up yogic centre
Central, State-level task forces mooted for food processing
Diamond trade gets ready for face-off: Are synthetics `real'?
A touch of glitter
Mumbai realtors protest MoE notification
Kolkata tanners in fix over delay in effluent plant
Design workshop in Madurai
WTO emergency meet to tackle textile quota abolition issues
Medical transcription back in demand
FIEO plans to organise global congress on trade in services
HR conclave on leadership
A watchman over the taxman
Some kindness to gifts in kind
A plan bit too grand
Salaried are no maharajas
Edible oil prices softening; imports may gather momentum
EU to allow duty-free import of brown basmati
ICCI tells Kerala to draft export policy to curb declining trend
ITC travel arm brings out guidebook for tourists
Flexing muscles
Access Info to bring out Kerala Industrial Yellow Pages



The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line