C Rangarajan, Prime Minister's Economic Advisory Council Chairman, is studying the proposed formula of Reliance Industrials Limited for fixing the natural gas price.
Committee of secretaries is working on the formula and it is understood that EAC is also being asked to go through the formula.
Analysing the RIL pricing, senior officials who are looking into the matter said the end price of $4.33 per million British thermal units is affordable compared with the current rates of natural gas in domestic and global markets.
There have been some reservations on the RIL's formula concerning the value of gas in which almost 97% in the formula is the fixed component.
RIL's formula has to get an approval either from the government or from the regulator in terms of production sharing
contract.
RIL's Krishna Godawari Basin that is set to produce 80 million standard cubic metres of gas (mmscmd), had invited bids from power and fertiliser companies on the basis of formula.
Crude oil from KG Basin, a big discovery in the oil sector, is expected to hit the market by mid 2008; but a formula for pricing the gas has not yet been fixed.
According to officials, public sector companies such as ONGC and OIL have decided to sell gas at administered prices, a cost-plus approach while British Gas, RIL and ONGC consortium sell gas from the Panna, Mukta and Tapti fields at market price, which prescribes a cap.
The gas pricing of RIL is based on the guidelines listed in a report by the Committee headed by Oil Ministry's Joint Secretary & Financial Advisor P K Sinha.