In midst of controversy over the oil ministry’s proposal to raise natural gas prices, Oil Minister M Veerappa said that the revision in rates was a contractual requirement that will help remove policy uncertainty and spur investments. Citing that the current rate of $4.2 uneconomical to produce gas from deep-sea fields, Moily has proposed to price all domestic gas at a uniform rate suggested by a panel headed by Prime Minister’s economic advisor C Rangarajan.
Moily said that the oil ministry has lowered the price that Rangarajan committee had suggested in the interim to market pricing. All domestic gas, conventional and unconventional, is proposed to be priced on a quarterly average of international hub price and actual cost of imported LNG, which currently comes to $6.775. Further, Rangarajan panel suggested pricing will be valid till the end of 12th Plan and thereafter a market driven regime to be recommended by a separate committee will come in play, Moily added.
By adding further, the minister said that India has vast resources of oil and gas that can help to cut $160 billion oil import bill but without the right pricing and policy regime, resources will remain trapped inside earth. He added that gas pricing is an issue and investors don’t want to invest unless we tell them the path of pricing the gas.
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