ONGC demands over 12 pc hike in APM gas price

NEW DELHI: State-run Oil and Natural Gas Corp (ONGC) has demanded a 12.5 per cent hike in price of natural gas it produces from fields given to it on nomination basis as it was incurring losses at the present price of Rs 3.2 per cubic meter (1.97 dollars per million British thermal units).

ONGC Chairman and Managing Director R S Sharma has stated that the company's realisation was only Rs 2.97 per cubic meters after paying for royalties and taxes. Against this, the cost of production was Rs 3.272 per cubic meter. "As per the cost accounting records for the year 2005-06 duly audited by cost auditors, ONGC had negative margin of Rs 0.302 per cubic meter on gas business," he wrote to Petroleum Secretary M S Srinivasan on July 30.

ONGC is to produce 38.77 million standard cubic meters per day of gas from fields given to it on nomination basis and priced by government orders (called APM gas) in 2007-08. It would produce another 8.38 mmscmd from fields operated outside the APM regime.

Sharma said the APM gas price should be raised to Rs 3.6 per cubic meter as recommended by the Tariff Commission and it year a 20 per cent hike should be effected so that the prices are gradually aligned to market standards. For non-APM gas, he sought a minimum price of 4.75 dollars per mBtu, the price of gas sold from Panna/Mukta and Tapti fields off Mumbai.

The ONGC demand comes at a time when Prime Minister Manmohan Singh has referred the issue of gas pricing to a group of ministers after power and fertiliser sectors in general and Anil Ambani Group in particular wanted the government to renege on its promise of giving market price to companies investing in gas exploration.