Kirit Parikh Panel recommends $4-6.50/unit gas price band for old fields

The committee’s recommended price band of $4-6.50/unit would be applicable for those legacy or old fields of ONGC and OIL -- where the cost has long been recovered and which are currently governed by a formula that uses rates in gas-surplus nations such as the US, Canada, and Russia.

In September, the government constituted the committee, led by energy expert and former Planning Commission (since renamed NITI Aayog) member Kirit Parikh, to review the gas pricing formula for gas produced in the country with the aim to ensure a fair price even as global prices for gas remained high.

“We have listened to all stakeholders and considered their concerns. And we have tried to balance them in the sense that we give all producers adequate returns, distributors adequate margin and consumer fair price. We didn’t want to increase any burden on the government,” said Parikh.

Gas from legacy fields is sold to city gas distributors who had to raise rates of CNG and piped cooking gas by over 70 per cent after prices went up from $2.90 per million British thermal unit till March to $6.10 in April and further to $8.57 last month, reflecting a surge in global rates. This rise in rates, which narrowed the gap between CNG and polluting diesel, had prompted the review.

This would ensure that explorers, who are seeing a surge in cost of services due to the spike in global energy rates, are not put at a disadvantage.

On October 1, prices of natural gas were increased 40 per cent as part of the government's six-monthly review of prices. The government sets the price of gas every six months, on April 1 and October 1, each year based on rates prevalent in gas-surplus nations such as the US, Canada and Russia in one year with a lag of one quarter.

(With inputs from agencies)

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