No change in gas price pooling for fertilisers

Mumbai, May 29 | Updated: May 30 2007, 05:30am hrs
The petroleum ministry has rejected the department of fertilisers request to exempt the latter from the gas price pooling formula of regassified liquefied natural gas (RLNG) for the fertiliser sector, saying it will directly affect subsidies. The Indian Farmers Fertiliser Cooperative Ltd (Iffco) had brought the recent decision of the petroleum ministry to increase the price of RLNG to the department of fertilisers notice.

The decision assumes significance especially in the wake of a recent communiqu by GAIL(India) and GSPCL to certain units of Iffco, regarding the revision of foreign currency component to Rs 207.02 per mmbtu for Aonla unit and Rs 209.32 per mmbtu for Kalol unit. According to the pact, the price of RLNG comprise two elements foreign currency component and Indian rupee component including taxes, duties and statutory leviesapplicable from time to time.

The existing foreign currency component for Aonla and Phulpur is Rs 140.65 per mmbtu (considering $1 = Rs 46) and for Kalol is $2.941 per mmbtu. However, the sudden increase in gas prices would have serious financial implications in terms of sharp increase in the fertiliser subsidy bill. Fertiliser subsidies have shot up to a record Rs 50,000 crore this year, according to Iffco.

Informed sources told FE the petroleum ministry has conveyed a policy decision to pool RLNG prices, and charge uniform pooled prices from all the new and existing customers. Accordingly, the foreign currency component was revised to Rs 207.02 per mmbtu for Aonla and Phulpur, and Rs 209.32 per mmbtu for Kalol. Subsequently, GAIL(India) and GSPCL further informed that foreign currency component would be revised form time to time in future. The date of applicability of the aforesaid price would be notified one week in advance before the revised price is made effective.

According to the petroleum ministry, the decision to pool RLNG prices was taken in public interest after examining all aspects.

NO LEEWAY

The price of RLNG comprise two elements foreign currency component and Indian rupee component including taxes, duties and statutory levies applicable from time to time
Iffco had brought the recent decision of the petroleum ministry to increase the price of RLNG to the department of fertiliser's notice
The decision assumes significance especially in the wake of a recent communiqu by GAIL(India) and GSPCL to certain units of Iffco