The government has constituted an empowered group of ministers to decide on utilisation and pricing of natural gas, which producing companies such as Reliance Industries [Get Quote] say should be determined by the market.

The EGoM will be headed by External Affairs Minister Pranab Mukherjee. It comprises ministers of power, chemicals and fertilisers, finance, law and justice, petroleum and corporate affairs and the Planning Commission deputy chairman as members, according to a notification dated August 13.

A committee of secretaries is already looking into the issue of pricing, which companies like RIL, British Gas and British Petroleum have said should be market-determined.

However, buyers like Reliance Natural Resources Ltd [Get Quote] have argued they should get gas from RIL at prices agreed mutually.

The EGoM will study all relevant material, including the reports of Cabinet Secretary and the Chairman of Economic Advisory Council, before taking a decision on the matter. 

Minister of State for Petroleum and Natural Gas Dinsha Patel informed Lok Sabha that the EGoM would decide on issues related to gas pricing under the New Exploration and Licensing Policy, which gives companies the right to sell discovered oil and gas at market price.

BG and BP have urged the government to maintain the sanctity of Production Sharing Contract, which allows operators to sell oil on international price parity basis and gas in the domestic market on arms length basis, he said in a written reply.

Under the terms of PSC, he said RIL had submitted the price formula for sale of gas from KG Basin for approval of the government. "This price formula has been considered by the Cabinet Secretary," he said.