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Madhumita Chakraborty
New Delhi, June 29: Gas prices are poised to shoot up by more than 15 per cent beginning July 1, touching an all-time high at Rs 2499 per 1000 standard cubic metres (SCM), since deregulation began in September 1997.Gas consumers in the north-east, who get a concessional price, will have to pay roughly 22 per cent more for the fuel. Gas producers, like the Oil and Natural Gas Corporation (ONGC), will get a 21 per cent hike in the producer price.
The steady increase in crude oil and petroleum product prices worldwide since March, coupled with the enhanced parity between international fuel oil prices and gas prices at home, resulted in the whopping increase in the prices of the power and fertiliser plant fuel. Since September 1997, natural gas prices have been partially pegged to a basket of internationally traded fuel oil prices.
The steady increase in fuel oil prices (in tandem with crude oil prices) will find natural gas more than 15 per cent dearer in the coming quarter, from the prevailing price of 2167per 1000 SCM. Gas-based industries in the northeast will pay Rs 1499 per SCM for natural gas, beginning Thursday, compared to Rs 1224 per SCM during the April to June quarter, an increase of 22 per cent.
Gas producers in the north-east, like Oil India Limited also get a concessional producer price, which is reimbursable from the gas pool account.The ONGC, which stands to gain by the uptrend in crude oil prices as well, will get a producer price of Rs 2224 per SCM, compared to 1834 per SCM during the April to June quarter.
The effective price for gas-based industries will be 10 per cent less, since gas prices are fixed on a calorific value of 10,000 kilo calories. The gas available from the ONGC, OIL and joint sector gas fields usually has a calorific value of 9,000 kilo calories and is therefore priced accordingly.Consumers also have to pay Gas Authority of India Limited (GAIL) transportation charges of Rs 1150 per SCM (at 8,000 kilo calories), apart from excise duty, sales tax and other levies. Power andfertiliser plants pick up nearly 90 per cent of the 60 million standard cubic metres of gas supplied per day (MMSCMD). Natural gas is also a cost-effective fuel for sponge iron plants, ceramic units and other industries.
The increase in natural gas prices at home has been somewhat compounded by the progressive linking of gas prices to a basket of internationally traded fuel oil prices. Beginning April this year, gas prices reflect 75 per cent of a basket of furnace oil and low sulphur heavy stock (LSHS) prices, compared to 65 per cent last year.
Gas prices had dropped marginally since April, reflecting the downtrend in oil prices between December last year and February this year. During the period, crude prices had dwindled to an all-time low of close to $ 9 a barrel.
In March, crude oil prices touched a healthy $11 to a barrel mark and never looked back. In May, crude oil prices ranged between $ 16 a barrel to $ 14 a barrel in all the key trading centres, like Dubai, Oman and the North Sea. The WestTexas Intermediate (WTI) crude hovered around $ 17 a barrel to $ 18 a barrel.
Prices of petroleum products, including fuel oils have moved in tandem with crude prices.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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