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Mar 22, 2012, 08.09 AM IST | Source: CNBC-TV18

No justification to hike RIL's KGD6 gas price: OilMin srcs

There is no legal and financial justification to hike RILs KGD6 gas price, reports Nayantara Rai quoting oil ministry sources.

There is no legal and financial justification to hike RIL 's KGD6 gas price, reports CNBC-TV18's Nayantara Rai quoting oil ministry sources.

It is learnt that the oil ministry has strongly recommended that gas price should not be revised at this moment since they believe there is no financial or legal justification for doing so.

Its main argument is that if gas price is hiked subsidy burden will also be increased. For example if gas price is increased by USD 10 mmbtu RIL will start making USD 10 billion more in revenue and  the government USD 1 billion more. However a subsidy burden could go by as much as USD 9 billion.

This will have a huge fiscal hit and therefore advised against it.

Also, the oil ministry has disagreed in response to EGoMs proposal to have an independent regulator for fixing the gas price. According to oil ministry, EGoM
should have the final say as even the Supreme Court has decided it.

READ MORE ON  KGD6, RIL, oil ministry
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