Domestic natural gas price to go up

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New Delhi: Prices of domestic natural gas is set to go up, as the government is likely to decide on Thursday the price of the product in tune with the recommendation of Rangarajan committee.
 
Revealing this, sources in the government said, if after consideration the Union cabinet gives its nod, prices of natural gas would be doubled to $8.42. This is being done despite resistance from many quarters, as it would result in increase in electricity tariff and fertiliser cost. 
 
Sources said that the petroleum ministry’s proposal to price all domestically produced natural gas as per a complex international hub and imported LNG-based formula suggested by the Rangarajan panel is listed as item number 8 on the agenda of cabinet committee on economic affairs (CCEA) meeting scheduled for Thursday and will be chaired by Prime Minister Manmohan Singh. 
 
The price formulation is to come into effect from April 1, 2014 for all domestically produced gas — be it that of state-owned companies like ONGC or private firms like Reliance Industries, and rates will be revised every quarter till 2017 when prices will be completely freed, sources said.
 
The price of gas if CCEA accepts the proposal will be $8.42 per million British thermal unit as opposed to $4.2 currently. The rates are higher than $6.775 that the ministry had been propagating to temper opposition.
 
Sources said power and fertiliser ministries have opposed the move, as it would result in cost of electricity generation rising to unviable levels and steep jump in urea subsidy. 
 
Left parties have alleged that petroleum minister M. Veerappa Moily is trying to help RIL by proposing a steep hike. The CCEA, some government insiders say, may not accept the proposal of revising prices every three months based on quarterly average of international hub and imported gas (LNG) price.