The government is likely to approve by next weekend a price for natural gas to be produced by Reliance Industries [Get Quote] from KG block starting with July 2008.

The Prime Minister's Office has asked petroleum ministry to decide on the issue, incorporating the recommendations of a Committee of Secretaries, headed by Cabinet Secretary K M Chandrasekhar, that went into the price formula proposed by the Mukesh Ambani firm and the opposition from power and fertiliser sectors.

Sources said the CoS had recommended formulation of gas utilisation (allocation of gas to different sectors) and transparent pricing policies while keeping in mind the State's contractual obligations for areas similar to one won by Reliance in 2000 through global bidding under New Exploration Licensing Policy.

However, many doubt if gas utilisation and pricing policies could be forced on Reliance's KG-D6 block as any new policy can not be implemented retrospectively. Reliance had won KG-D6 in first round of auction under NELP with a promise from government that it will be allowed freedom to market the discovered hydrocarbons.

In view of the law ministry opining that any backtracking on the commitments given under Parliament-enacted NELP would not stand a scrutiny in any court, the PMO asked oil ministry to quickly decide on the gas price, the sources said.

Ministries of fertiliser and power and Mukesh's younger brother Anil had opposed RIL's price of up to 4.58 dollars per million British thermal unit for gas from KG-D6 and wanted government regulation so as to keep input cost of power and fertiliser plants down.