The Vijay Kelkar committee on pricing of natural gas is expected to endorse the price arrived at by the C Rangarajan panel of $8.4 per mmBTu?the measurement unit (million metric British Thermal units).

It is also expected to help the government to come close to a bipartisan consensus on the pricing of this natural resource, avoiding controversies like the one dogging it on coal.

Since the report of the committee is still in progress, the empowered group of ministers which is expected to take a call on the pricing on Tuesday, could postpone its meeting.

The recommendation by the Kelkar committee will be a part of its final report. The committee was set up by the petroleum and natural gas ministry to suggest ways for India to reduce its dependence on imports for energy with a road map till the year 2030.

The numbers will be crucial for a host of companies operating in India?s largest offshore gas fields like Reliance Industries, BP and Niko Resources at KG-D6 as well as Cairn India and GSPC, in other fields. The decision will be key to ensuring that natural gas output meets the over 19 per cent rise in demand projected by 2017 as per the 12th Five Year Plan.

According to a government source, the Kelkar committee could offer a band of prices besides formula arrived by C Rangarajan, the chairman of the Prime Minister?s Economic Advisory Council. However, the price band is unlikely to differ substantially from the thrust of the Rangarajan formula, making it easier for the ministerial panel to take a call on.

Along with coal, pricing of natural gas has become the biggest decision the government needs to take to push investment in the economy.

The Kelkar committee has six months? time to give its final report but since the KG-D6 fields of RIL are slated to get the new price with effect from April 2014, it could give an interim report on the subject soon.

Kelkar has served as adviser to Jaswant Singh, the finance minister in the NDA government. He has also worked with current finance minister P Chidambaram as late as last year to prepare a fiscal road map for the Centre.

Where the Rangarajan panel has used a gas pricing formula based on an average of two prices, that obtaining at the well heads of exporting countries and the volume-weighted prices at key markets like Henry Hub of USA, NBP of UK and Japan Custom Cleared prices, the Kelkar panel is expected to include a more diversified basket of producer country prices.

The government source also said the Kelkar committee has also taken on board the reservations of ministries like power, fertiliser and finance ministries on the pricing suggested by the Rangarajan panel. The ministries have argued that such steep rise in prices will impact the production costs of downstream urea and electricity plants which will force the government to offer subsidy to neutralise them.

PRICE DISCOVERY

* The price arrived by the Rangarajan formula is $8.4 per mmBTu

* The Kelkar committee endorsing this formula would help the government come close to a consensus on pricing

* An empowered group of ministers would take a decision based on the report

* The numbers would be crucial for gas producers operating the country?s offshore gas fields

* The decision on price would also be a key to ensure that gas output meets Plan targets