Govt to align local gas with global prices
Economic Survey 2012-13 has noted that efforts are on to review the states’ existing contractual obligations with natural gas producers to decide whether they can sell their produce at market prices.
A committee set up by the Prime Minister’s Office under C Rangarajan has suggested a five-year time frame within which, to align domestic natural gas prices with international prices (Henry Hub). The Survey notes that mis-alignment of energy prices is leading to huge untargeted subsidies. It also leads to under-pricing for the producer that reduces his incentive and ability to invest in the sector and increases reliance on imports.
“The government is reviewing pricing under the price sharing contract to clarify the extent to which producers will have the freedom to market the gas,” the Survey notes. As on March 2011, India’s estimated natural gas reserves were 1,241 billion cubic metres as per petroleum ministry estimates.
Foreign direct investment (FDI) in oil and gas exploration have, however, taken a hit owing to persisting global risks and depressed business sentiments. FDI in petroleum and gas have dipped by 89 per cent during April-November this financial year against 68 per cent decline in the power sector.
Currently, the operators are free to sell gas
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