ONGC and Oil India Ltd (OIL) can now sell gas from the fields given to them on a nomination basis at $4.2/mBtu, on par with the price of Reliance Industries Ltd's (RIL)
The increase in gas prices would be valid up to March 31, 2014. The customers from the North-East, however, would get a subsidy of 40 per cent. Apart from the gas price increase, the Cabinet has also allowed GAIL (
In addition, there would be the taxes and other levies. The main buyers of APM gas are power, fertiliser, and city gas distribution companies. For the power sector, the impact would 2.75 per cent on electricity tariff, while for compressed natural gas it would mean an increase of 20 per cent depending on the city and the company.
Nomination fields were given to ONGC and OIL before the licensing rounds (NELP) came into being. This price revision of gas sold under administered price mechanism (APM) took place last in 2005. Currently, of 140 mscmd of gas produced in the country, 55 mscmd is APM gas.
For ONGC and OIL, which has been suffering under recoveries because of selling gas at an administered price, it means positive news. The fields of ONGC and OIL are mature and ageing. Hence, the substantial expenditure is necessary to maintain their gas production. On an annualised basis for ONGC this increase would mean gas revenues will go up by Rs 5,400 crore and net profit by Rs 3,200 crore.
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| Company Name | CMP |
|---|---|
| ONGC | 255.80 |
| Oil India | 615.60 |
| Jindal Drilling&Inds | 630.35 |
| Hind Oil Exploration | 183.75 |
| Deep Industries | 287.75 |
| View more.. | |
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