(DNA)
State-owned Oil and Natural Gas Corp (ONGC) has sought a review of the natural gas pricing formula as rates have dropped below cost.India’s largest natural gas producer demanded a floor or minimum price of natural gas be fixed at USD 4.2 per million British thermal unit for the business to make economic sense. The BJP-led government in October 2014 had evolved a new pricing formula using rates prevelant in gas surplus nations like the US, Canada and Russia to determine rates in a net importing country.Prices have halved to USD 2.5 per mmBtu since the formula was implemented.
“Keeping in view of cost of production of gas, cost of alternate fuels and other market dynamics, Ministry of Petroleum and Natural Gas is requested to review the existing domestic gas price formula and provide a floor price at least to the level of earlier APM (regulated) price (USD 4.20 per mmBtu)/ non-APM price (USD 4.20 to USD 5.25 per mmbtu) fixed in June 2010,” ONGC said in a communique.The new formula provides for revising rates every six months – on April 1 and October 1, based on one-year average gas price in the surplus nations with a lag of one quarter.
