CCEA to take up gas pricing issue next week: Sources

The Cabinet Committee on Economic Affairs (CCEA) is likely to take up gas pricing issue next week, exclusive sources told CNBC-TV18.

Early this year, a panel of experts had recommended doubling domestic gas price from about  USD 4.2 per mmBtu (metric million British thermal units), with the price to be reviewed on a monthly basis. However, the oil ministry in its final proposal instead suggested an increase to above USD 6.7 per mmBtu level and has also called for quarterly review.

The note for the CCEA proposes new gas price between  USD 6.76/mmBtu to USD 8.93/mmBtu in FY14. Further in FY15, it should be at around USD 10.29 and should be raised to USD 10.92 in FY16.

However, the power ministry has opposed to a price that is above USD 5/mmBtu.

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The power ministry disagrees on the new price revision on grounds that the price for the sector should be competitive to competing fuel such as coal and should be affordable. Base price of domestic gas beyond USD 5 per mmBtu may be unviable for power generation, it believes.

The power ministry had also said that every dollar increase in gas prices would push the sectors costs up by  Rs 10000 crore.

However upstream companies like ONGC which are battling with ageing fields will be benefitted by prive revision