In all likelihood of Rangarajan formula on gas pricing policy being junked, a four-member panel of secretaries will submit its report on a new gas pricing mechanism by Wednesday. The government had in the last month formed a panel, comprising of secretaries of power, fertilizer and expenditure with additional secretary in the oil ministry as its member secretary to hold extensive consultations with stakeholders, primarily gas consumers and producers.
The committee was formed with an objective of examining the whole range of issues related to gas pricing, including the Rangarajan Committee formula, which were approved by the previous UPA government but could not be implemented as the Election Commission barred price announcement in the period leading up to general elections.
The NDA government on June 25 postponed its implementation by a further three months, i.e. September 30 for a comprehensive review and decided to come up with a new policy regime by October 1, 2014. However, according to few media reports, the new panel has found several flaws in formula suggested by the committee headed by former RBI governor C Rangarajan, which had been put in abeyance by the Election Commission. A new price based on the Rangarajan Committee formula would have most likely doubled the gas price to $8.4 per unit from April 1.
However, it remains to be seen whether the secretaries’ panel will recommend a uniform gas price or only the new fields actually will get the new rates.