Fertiliser department for hiking gas rates

NEW DELHI: The fertiliser department, which had earlier opposed any upward revision of natural gas rates, has accepted a pricing formula that provides marginally higher value than the gas price proposed by the oil ministry, a draft cabinet note said.

The fertiliser department has suggested certain changes in the pricing formula proposed by the Rangarajan committee, which gives $6.78 per unit rate for gas in the current quarter of 2013-14, said officials examining the draft. The oil ministry's proposed rate for the corresponding period is $6.77 per unit, officials said.

Other than the power ministry, all other departments have proposed a gas price, which is $6.77 per unit or more. The power ministry has asked for a gas price below the prevailing rate of $4.20 per unit at which bulk of India's domestically produced gas is sold, officials said quoting the note.

"It appears that there is a consensus among various government departments to accept the Rangarajan formula with very minor changes so that gas price hike should not be abnormally high," a senior government officials with direct knowledge of the mater said.

A consensus has emerged among various government arms to accept the formula proposed by the Rangarajan committee without any major change to avoid controversies, government officials with direct knowledge of the matter said. "In order to avoid controversies, it is better to accept the committee's recommendations," a cabinet minister said requesting anonymity. Prime Minister Manmohan Singh had constituted the Rangarajan panel in May last year, which has proposed a gas pricing formula based on prevailing producers' price in gas exporting countries and average of gas rates quoted at international trading hubs.

The government plans to move a final version of the note in the cabinet committee on economic affairs (CCEA) meeting on Friday, officials said. The draft is being revised on insistence of the Prime Minister's Office.