The Cabinet Committee on Economic Affairs (CCEA) is likely to take a decision soon on the issue of natural gas pricing. It is expected that CCEA will raise natural gas prices by around 60 per cent to $6.775 per million British thermal unit (mbtu) as against the present rate of $4.2 per mbtu for all domestically produced natural gas, which will impact the power and fertilizer sectors hard.
Meanwhile, the CCEA proposed price $6.775 mbtu is lower than the $8 to $8.5 mbtu suggested by the Rangarajan panel, which recommended domestic gas pricing at an average of rates at key international hubs. Further, CCEA draft also states that the natural gas prices will be revised on the quarterly basis and for the April-June quarter of 2014, it comes to $6.775 per mbtu. The pricing will be applicable to gas produced from all sources, conventional as well as unconventional like shale gas, CBM etc.
Earlier, Oil minister M V Moily said that the revision in rates was a contractual requirement which will help remove policy uncertainties and spur investments, citing that the current rate of $4.2 per mbtu is uneconomical to produce gas from deep-sea fields.
Meanwhile, the move is facing stiff resistance as it would result in a rise in electricity tariff and fertiliser cost. The power ministry suggested that that gas price should not be more than $5 and rates should not be hiked for gas produced by state-owned firms like the Oil and Natural Gas Corporation Limited. However, the power ministry's suggestion was rejected by oil ministry.
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: