While the PMO has now asked the petroleum ministry to get a legal opinion on whether Reliance Industries Ltd (RIL) can be allowed to hike prices from the $4.2 per mmbtu that was finalised by the Group of Ministers in October 2007, the real issue is once again about the downstream impact. Each one dollar hike in gas prices results in power costs rising by about 35 paise per unit, or 50 paise by the time it reaches the end consumer. Since what is being talked about is a $3-4 hike, if not more, the impact on the power sectors finances will be largethe principal argument made by those who argue for a hike is that all contracts today, including by government companies, are taking place at a price that is double or triple that paid to RIL. It is obvious allowing RIL to charge a higher price will send out a good signal to potential investors in the petroleum sector, but this has to be balanced by the impact on the downstream sector. At the end of the day, the issue that the Empowered Group of Ministers (EGoM) has to keep in mindthe legal opinion got by the oil ministry has to be given to the EGoMis that you cannot have deregulated prices in an input sector (gas) unless prices are deregulated in the output sector (electricity, fertilisers) as well.