No change in gas prices for 3 months, Govt says it’s not mulling raising LPG, kerosene prices

New Delhi, 25 June, 2014

The Cabinet Committee for Economic Affairs on Wednesday decided to defer the gas price hike by 3 months, said Oil Minister Dharmendra Pradhan. The cabinet has decided that there is need for more consultation on gas price hike, he further said addint that the status quo on gas pricing will continue.

“Rangarajan panel formula on gas pricing will be reviewed,” he said and clarfied that there is no plan to hike LPG, kerosene prices.

Commenting on the decision Law Minister Ravi Shankar Prasad said, “New government must be given time to take gas price call.”

Pradhan and Finance Minister Arun Jaitley had met Prime Minister Narendra Modi on twice last week to explore options to revise gas prices to incentivise output without stoking inflation and increasing the subsidy burden on power and fertiliser sectors.

The oil ministry had informed the PMO about the need to take a decision well before July 1 in view of arbitration proceedings initiated by Reliance Industries against the central government over what the company says is the state’s failure to abide by the terms of the Production Sharing Contract (PSC) which provides for marked based pricing, a senior oil ministry official said.

The significance of July 1 was because in April the oil ministry had informed RIL that new prices would be announced by that date. Reliance Industries had been supplying gas from its eastern offshore KG-D6 field at the old price of $ 4.2 per unit even though the five year period for which that price was valid ended on March 31.

Oili Minister: To review gas price policy afresh is in interest of common man. All stakeholders need to be consulted on gas prices. There’s no proposal on table for any hike in LPG, Kerosene prices.

Law Minister: Gas price matter requires extensive consultation. Mechanism of consultation to be decided by Oil ministry. New Government must be given time to take a call on gas pricing.

Finance Minister:Gas price decision is now between PMO and Oil ministry. Mechanism for gas price revision is being reviewed. Review of gas price mechanism will be in the light of Ranga formula. Review of Rangarajan formula on gas pricing will take time.

Official statement:

The domestic natural gas pricing guidelines which were announced on 10 January 2014 were later deferred due to the Model Code of Conduct that had been effected in the country at that time.

The Cabinet Committee on Economic Affairs today decided that the comprehensive discussions were necessary on the issue and the guidelines. It was decided that consultations would be held with all stakeholders and it was important to keep public interest in mind.

Therefore, the CCEA has deferred this issue for a period of three months.