Within days of approving a new look gas pricing policy, the UPA II has “virtually withdrawn” the officially declared $8.4 million metric British thermal unit (mmbtu) price to be in force from April 2014, making it clear that it will be the Rangarajan
formula and the market forces which will decide the price in future.
At present, on the basis of the Rangarajan formula, the price for natural gas in India for the quarter April-June 2013 comes to $6.83 per mmBtu. As per the Rangarajan formula, the price will be fixed on the basis of average of net back price of Indian gas imports and also the weighted average of the price at international hubs. The underlying principle is that the Indian producer should get a similar price what the gas producers elsewhere are getting. “At present, the gas price comes to around $6.83 mmBtu. What it will be in April 2014, it is very difficult to say as it will all depend on what is happening in the gas industry around the world and at what point are the bench mark prices ruling. But certainly it is not going to be $8.4 mmBtu which has been termed as the price from next year,” a senior Petroleum Ministry official said.
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