New natural gas pricing formula by Sept 30: Govt

The government on Wednesday said it will come out with a new natural gas pricing formula by September 30 keeping in mind the interest of investors and public.

Replying to questions in Rajya Sabha, Oil Minister Dharmendra Pradhan said the NDA government decided to review the pricing formula keeping in mind public interest and recommendations of the Parliamentary Standing Committee.

The Minister did not share details, but said the decision will be taken keeping in mind interest of investors and public and the formula will be announced by September 30.

The previous UPA government had in December last year decided to price all domestic gas from April 1, 2014 according to a formula suggested by the Rangarajan Committee.

The formula was notified on January 10 but before a new rate could be announced, General Elections were declared and the issue was left for the new government to decide.

The new government on June 25 decided to defer the implementation till September-end to hold wider consultations.

The existing gas pricing under New Exploration Licensing Policy (NELP) was approved in 2007 and was to remain valid up to March 2014.

For reviewing the formula, the government constituted a committee under C Rangarajan in May 2012 and based on the panel's recommendation, Domestic Natural Gas Pricing Guidelines, 2014 was notified in January this year.

The Rangarajan formula would lead to doubling of natural gas prices to $ 8.4 per million British thermal unit, an increase that would jack up urea production cost, electricity tariff and CNG rates.