Rangarajan gas pricing formula rejected by most ministries

PM's Economic Advisory panel chairman C Rangarajan, in December, submitted his recommendations on the new gas price formula to the Prime Minister. The oil ministry then floated the recommendations to various ministries, prepared an Empowered Group of Ministers (EGoM) note and now it appears that most of the ministries have rejected the proposal.

Any plan to hike gas prices at the moment is a major road block because now a new formula will need to be worked out. CNBC-TV18's Nayantara Rai reports. Also read: Coal price pooling hard to put in practice: ex-CIL CMD
Baring the oil ministry, all the key ministries involved has rejected the recommendations. The finance ministry has told the oil ministry to come out with an alternative formula. They do not like the formula proposed by Rangarajan, because the formula is linked with the Japanese crude hub which is very expensive, the finance ministry feels that there is no logic in doing so as it is a very expensive market and prices are only increasing since the Fukushima incident.
In addition to that, they are also not agreeing with many other technicalities of the formula. So, they want a new formula to be proposed before the EGoM.
Power ministry says they cannot have a gas price of above USD 5 per mmbtu because that will make it unviable for power generation. They also mentioned that the financial restructuring that the discoms are going through will totally be negated by high domestic gas price. They want a cap for this formula saying that it should not be any regular revision of the gas price formula since it will lead to a lot of volatility.  
Fertilizer ministry is also affected, it is the priority sector when we talk about gas supplies in the country against the formula has come out with many technical faults that it finds in Rangarajan’s formula and if is adopted subsidy outgo will go up by Rs 10,000 crore a year more than Rs 16,000 crore by the end of 12th five year plan.