RIL, ONGC, BP, Cairn unite to demand immediate price hike

India's energy producers like Reliance Industries, Oil & Natural Gas Corp, BP, and Cairn India today unanimously demanded an immediate hike in natural gas prices, saying the current sub-market price of $4.2 per unit was impeding development of over a dozen discoveries.

As the government began consultations with stakeholders on raising gas prices, gas producers and consumers met a committee of secretaries (CoS) separately with their pleas on the issue.

The panel, chaired by power secretary P K Sinha, reportedly heard out both sides and asked them to present their views in writing by 28 August.

Expenditure secretary Ratan P Watal skipped the meeting of the CoS of which fertiliser secretary Jugal Kishore Mohapatra is member and Rajive Kumar, additional secretary in the ministry of petroleum and natural gas, is member secretary.

Kumar said there will be another meeting of the panel this week.

According to reports, while gas producers said as many as 10 trillion cubic feet of gas cannot be developed at current below market rate of $4.2 per million British thermal unit, power generators countered that they cannot afford a rate more than $5 a unit.

Fertilizer makers too stated that doubling of rates, as had been approved by the previous UPA government would lead to increases in subsidy.

While producers, who were invited separately, attended in full strength with the sole exception of Gujarat State Petroleum Corp (GSPC), consumer sectors were represented by their associations - Association of Power Producers and Fertilizer Association of India, besides some individual companies.

Producers gave 35 minutes of their unanimous view to the committee, which throughout the session was mostly listening and offered neither counter suggestion nor argument.

Sinha suggested that the participants should send their written submission addressed to petroleum secretary Saurabh Chandra, who is not part of the committee, by Thursday morning.

Sources said producers reiterated that the sanctity of Production Sharing Contracts (PSC), which the government has entered into with them, should be maintained. The PSC provides for a market discovered gas price.

They also stated that the best option was the implementation of the 2006-07 recommendation of the Committee headed by P K Sinha, who was then additional secretary in oil ministry, where it was stated that gas price should be discovered by asking consumers to bid.

Sinha as power secretary is now talking of protecting interest of consumers.