A decision would be taken at an appropriate time, said minister of state (independent charge) for petroleum and natural gas Dharmendra Pradhan on Tuesday.
We are examining all aspects of the issue. We are deeply into it. A right decision will be taken at the right time, Pradhan said when asked if his ministry would be approaching the cabinet committee on economic affairs (CCEA) on the gas pricing issue over the next few days.
The power ministry, on its part, is evaluating the cost implications of higher gas price on producers. Official sources did not rule out the new government opting for a formula other than the one recommended by C Rangarajan for price revision.
Any delay in the implementation of the new gas price (almost double the current $4.2/mmBtu if the Rangarajan formula is applied), which was to be effective April 1, would be bad news for gas producers such as ONGC, Oil India, Reliance Industries and Cairn India.
Pradhan is learnt to have asked officials to take out all the old files related to gas pricing and make point-wise detail of all decisions taken by the UPA government. The ministry is expected to discuss with the Prime Minister's office before taking further steps on notifying the revised gas price.
Pradhan said that his government's priority is to bring back the economy on track that has 'derailed.' "Economic reforms are not anti-poor. Economic reforms are in fact pro-poor. We need to strike a balance between the two and we will do it. I do not want to say anything more than this right now," Pradhan told reporters.
On April 21, the petroleum ministry, then headed by Veerappa Moily, had said in its order that the earliest possible date for applying the revised gas price will be July 1.
It is learnt that leaders within the BJP have reservations in implementing the formula prescribed by former PMEAC chief. The power and fertiliser companies are not in a position to use expensive gas as the price of their end product is not market-linked.
Moreover, the parliamentary standing committee on finance headed by Yashwant Sinha had cautioned that revising gas price has serious repercussions for the economy as a whole, which warrants careful deliberations and prudent decisions. If gas price increases by $1/ mBtu, then per tonne increase in production cost of urea will be a huge Rs 1,369.5.
BJP leaders, including finance minister Arun Jaitley, had said during campaigning for the general elections that if they are elected, the Rangarajan-formula would be reviewed.
The gas sale purchase agreements (GSPA) between RIL (the seller of gas from KG-D6) and buyers expired on March 31.
Moody's had projected a combined revenues of the upstream companies to rise by up to $2.8 billion had the price hike been implemented on April 1 as scheduled.
A new pricing regime based on the Rangarajan formula was to be implemented from April 1 for all private and public sector natural gas producers. The decision to revise gas prices was first taken in June 2013 and notified on January 10 this year.