The Union Cabinet in June decided to price all domestically produced natural gas at an average of the price prevailing at international gas trading hubs and the actual cost of importing liquid gas.
The pricing formula will be effective from April 1, 2014 for a period of five years, with the price being revised quarterly.
The price for each quarter will be calculated based on the 12-month trailing average price with a lag of one quarter (i.e. price for April to June 2014 will be calculated based on the averages for 12 months ended December 31, 2013).
Using the approved price formula, the price effective for April 1, 2014 is estimated at around $8.40 per million British thermal unit, double the current price of $4.20.
Both Finance Ministry and Power Ministry have sought cap or upper limit to which rates can be raised so as not to put excessive burden on consumers like electricity stations. "Suggestions have been made that there has to be cap on the price.
“And there is also a suggestion that we should exclude spot deals from the formula because they are very volatile. . . Cabinet will take a decision (on these)
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