The government had raised natural gas prices to Rs 3200 per thousand cubic metres per day for power and fertiliser units.
The price for all other industrial consumers would be around $3.86 dollars per million British thermal unit (mBtu) (Rs 6740 per thousand cubic meters per day), which is equivalent to current LNG price.
"The increase in gas price is not likely to have any adverse impact on GAIL's profitability," a company release said in New Delhi.
The enhanced gas price would increase the operational costs of GAIL towards internal consumption of gas for running compressors of HVJ pipeline and feedstock for petrochemicals and LPG plants by about Rs 875 crore (Rs 8.75 billion).
However, this would be more than offset by reduction in subsidy burden, which was Rs 1137 crore (Rs 11.37 billion) during 2004-05.
Out of the subsidy burden of Rs 1137 crore, about Rs 535 crore (Rs 5.35 billion) pertains to domestic LPG and the balance Rs 602 crore (Rs 6.02 billion) towards PDS kerosene.
"Since GAIL does not produce or market kerosene, the government has already agreed to keep it out of the kerosene subsidy burden.
Regarding LPG, the rationale behind sharing of subsidy burden was based on the premise that GAIL was using APM gas as feedstock.
As GAIL will henceforth pay LNG price for its LPG feedstock, this premise no longer holds good," it said.
Therefore, there is no rationale behind GAIL sharing any subsidy burden either on account of PDS kerosene or domestic LPG, the release said.
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