Power Ministry, States Assail Move To Hike Gas Prices

Mumbai, October 22: | Updated: Oct 23 2002, 05:30am hrs
The power ministry and various state governments including Andhra Pradesh, Tamil Nadu and UP have vehemently opposed the petroleum and natural gass ministry proposal to hike gas prices at Rs 4,200 per thousand cubic meters by January 1, 2003 and subsequently to Rs 5,800 per thousand cubic meters from April.

The power ministry and these erring governments have argued that this exhorbitant increase would not be justifiable when in the changed circumstances the power should be made available at an affordable tariff. The proposed rise in gas prices would result in the hike by Re 1 in per unit tariff at the generation level and nearly by Rs 2.50 when the power reaches at the level of consumer.

Top sources told FE on Tuesday that the Re 1 hike at Rs 3.50 from the present level of Rs 2.50 would be on fuel price alone at the generation level and ultimately it would go up to Rs 5 per unit. This unprecedented rise will compel the existing gas-based projects with a total generating capacity of 8,000 mw to be abondoned. So also it will affect the completion of gas projects with a total capacity of 3,000 mw which are in the pipeline, sources said.

According to sources, these projects had been commissioned at the price of Rs 1,500 per thousand cubic meters and it would not be feasible for them to continue their operations at the increased gas prices.