Amid growing talks over the new gas formula, the government has cleared that it will announce new gas price formula by September end. Oil Minister Dharmendra Pradhan has asserted that decision will be taken keeping in mind public interest and recommendations of the Parliamentary Standing Committee and a new formula will be announced by September 30. Till then, the $4.2 per mmBtu price of gas will continue.
Earlier, Parliamentary Standing Committees on Finance had stated that gas price should have some linkage with the cost of production and called for a review of the formula suggested by the panel headed by Dr C Rangarajan. Meanwhile, Oil Ministry has highlighted that the cost of gas production varies between USD 1.86 per mmBtu to USD 4.31 per mmBtu but a cost-plus price would be perceived negatively by the market.
In June 2013, the government had approved Rangarajan formula under which all domestically produced gas will be priced at an average of the price prevailing at international gas trading hubs and the actual cost of importing liquid gas (LNG). As per the formula, the gas prices will get doubled at $8.8 per million British thermal unit from the current price at $ 4.20 per mbtu and put excessive burden on consumers by increasing the cost of urea, power and CNG. The government had decided to implement Rangarajan formula from April 1 but with general elections being declared it was postponed by three months to July 1. The NDA government on June 25 postponed its implementation by a further three months to September