EGoM to meet on May 7,decide on Rangarajan formula for gas pricing

Following a direction from the Prime Ministers Office,the petroleum ministry has set May 7 as the date for the empowered group of ministers

Following a direction from the Prime Ministers Office,the petroleum ministry has set May 7 as the date for the empowered group of ministers (EGoM) to decide on nearly doubling the price of domestic natural gas.

Sources said petroleum secretary Vivek Rae was instructed by principal secretary to the Prime Minister to convene the EGoM meeting at the earliest.

It was decided to schedule it for May 7 to enable petroleum minister Veerappa Moily to continue campaigning in home state Karnataka where polls are due on May 5, the source said.

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The ministry has also been instructed to ensure that the EGoM also take up power ministrys request for changing the priority for KG D6 gas allocation by putting power plants on equal footing with urea producers.

Currently,top priority is given to fertiliser plants followed by LPG extraction units and power plants.

Under a complex methodology suggested by C Rangarajan,gas price would jump to $7.295 per million British thermal unit from current $4.2 which has been strongly contested by user ministries of power and fertiliser and the subsidy-bearer department of expenditure.

They oppose the formula of a globally-indexed price for domestic gas as it would levy burden on the citizen and the exchequer.

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The power ministry claims the new formula would raise gas price to $8.8 per mBtu,translating into Rs 6.40 per unit tariff to the common man.

The fertiliser ministry said the new price would lead to an additional subsidy outgo of around Rs 13,080 crore in the current fiscal.

The department of expenditure has argued against linking gas price to that of global gas hubs irrelevant to India.

Instead of linking to the UK,US and Japan,the department said linkage should be with Indias term suppliers such as Qatar,Oman,Abu Dhabi and Malaysia where gas is priced nominally.