The PMEAC Chairman C Rangarajan’s recommendation of pricing natural gas at an average of international gas hub prices has run into rough weathers, as the power, fertiliser and finance ministries have raised a red flag on it.
Rangarajan formula, uses the trailing 12-month average of the producer price of LNG imports to India and the price prevalent in the US, Europe and Japan, according to which the base price of domestic natural gas would go up to $8.8 mBtu from the $4.2 mBtu, currently applicable for gas produced from Reliance Industries’ KG-D6 and a host of other fields.
The power ministry opposed the recommendation saying that it would put additional cost of about Rs 29,800 crore on existing electricity producing plants, while the fertiliser ministry was of the view that the higher gas price would result in Rs 10,000 crores increase in urea subsidy per annum.
Moreover, the finance ministry said that there was no logic in linking domestic price with spot LNG contracts and thus rejected the formula and has asked oil ministry to come up with an alternative formula based on well head prices of suppliers in Abu Dhabi, Qatar, Oman and Malaysia.
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: