India Contemplates Ways to Align Domestic, Global Gas Prices
Indian government is thinking of raising gas prices by 5 per cent annually for eight years to align them with global benchmark rates, Deccan Chronicle newspaper reported.
Yet another proposal is to straight away sell 10 per cent of domestically produced gas at market prices linked to imports, as part of reforms based on the Rangarajan committee recommendations.
A group of ministers headed by finance minister P Chidambaram will consider these proposals. The group may also look at a Planning Commission proposal to link coalbed methane (CBM) and shale gas prices to global prices, the newspaper said.
There are three reasons for the proposals for 5 per cent annual hike in gas prices and sale of 10 per cent of local output at market prices.
One, this would eventually align Indian gas prices with global markets. Two, the government will have the flexibility in diverting half the gas produced to priority sectors like power and fertiliser at pre-determined prices. Three, the user industries can draw up long-term plans based on global gas prices.
A gradual price increase will mellow the finance ministry’s opposition, because higher investments in gas fields will reduce India’s dependence on imports, Deccan Chronicle said.