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CCEA defers its decision on revising gas prices to November 15

25 Sep 2014 Evaluate

In a major setback to the oil and gas sector, the Cabinet Committee on Economic Affairs (CCEA) has deferred its decision on revising gas prices, expected October-end, to November 15. The CCEA headed by Prime Minister Narendra Modi in its meeting, took up the issue but did not take a decision and deferred it to November 15.

Although, the Oil Ministry was in favour of remunerative gas price that will encourage investments in exploration and production, the Power Ministry does not want the rates to be hiked by more than 25 per cent over the current price of $4.2 per million British thermal unit (MBTU) as a higher fuel cost will push up electricity tariff.

It is being said that since the price increase will have direct implications on electricity tariffs and the gas used for cooking (piped natural gas) and auto fuel (compressed natural gas), the government did not want to take any risks with State elections coming up. Wider consultation is said to be essential and a draft cabinet note probable with comprehensive discussion possible only after the prime minister returns from the US.

The previous Government had in June last year approved a price formula suggested by a panel headed by C Rangarajan of doubling of rates from $4.2 per MBTU to $8.4 MBTU. The formula was to be implemented from April 1, 2014 but before a rate could be notified, general elections were announced and the Election Commission asked the government to defer the decision, later the new government deferred it for a further three months.

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