Govt defers revision in natural gas price by 3 months

The new government on Wednesday postponed revision in natural gas prices by three months pending a comprehensive review.

Oil Minister Dharmendra Pradhan said the current rate of $4.2 per million thermal units will continue till September end.

Finance Minister Arun Jaitley and Oil Minister Dharmendra Pradhan, who met Prime Minister Narendra Modi on Sunday, were in the Prime Minister's Office again on  Monday to discuss possible tweaks to the Rangarajan price formula, under which the price of gas would have risen to $8.8 from July from $4.2 currently.

While the new government was keen to take an early decision, it did not want to add to already high inflation, which may accelerate due to a below-normal monsoon and a spike in oil prices in the aftermath of the Iraq crisis.

Every dollar increase in gas price would have led to a Rs 1,370 per tonne rise in urea production cost and a 45 paise per unit increase in electricity tariff. There would be a minimum Rs 2.81 per kg increase in CNG price and a Rs 1.89 per standard cubic metre hike in piped cooking gas.

If the Rangarajan formula would have been implemented without changes, power tariff will rise by about Rs 2 per unit and CNG rates will jump by over Rs 12 per kg in Delhi.