GAIL India, which currently supplies around 79 mmscmd gas and transports around 110 mmscmd to various consumers, has argued that the gas price could be benchmarked to recently discovered prices in the domestic market. GAIL India submitted that the government’s move to increase APM gas price must, however, take into account the issues of core sectors like power, fertilisers would have concerns regarding higher gas price. So price increase must be gradual.
GAIL India chairman and managing director UD Choubey told FE,”As regards to the proposed increase in APM gas price, we believe that price increase of Oil & Natural Gas Corporation?s (ONGC) APM gas is long due since the cost of operations has increased over the years along with decline in production. Price increase would fund the additional expenditure for maintaining the existing production or enhancing recovery from existing fields. Price could be benchmarked to move towards recently discovered prices in the domestic market. This must, however, take into account the issues of core sectors like power, fertilisers would have concerns regarding higher gas price. So price increase must be gradual.
Further, Choubey said since price of gas was pass through, there would be no effect on GAIL India . However, price increase should be such that Gas Pool Account is maintained in stable manner and there is no deficit in the same.
On the gas pricing issue, Choubey said the price discovery for the Reliance Industries (RIL) K-G D6 gas by Government of India at the highest level by involving all players which include the administrative ministry, the producers and the end-user ministries . “This has set an excellent example where the interest of producers and consumers have been kept and at the same time the sanctity of the profit sharing contract (PSC) has been retained.
Moreover, Choubey asserted that it will provide gas to consumers at price which is neither too high for them and neither too low for the producers to incentivise them for their investment. “There is no denying the fact that the present pricing regime is very heterogenous and there is need to have a uniform price for consumers all over the country. It would be better if a through study is conducted to arrive at a benchmark price of gas in the country. This is essentially required since consumers buying gas at different prices have to compete with each other in the open market,” he said.