A market-determined price is the best option but the Constitution makes it clear that natural resources are a national asset.
Prices of natural gas, which is used to generate electricity, make fertiliser and is converted into CNG to run automobiles, were on Friday hiked by a steep 40 per cent to record levels, in step with global firming up of energy rates. The rate paid for gas produced from old fields, which make up for about two-thirds of all gas produced in the country, was hiked to $8.57 per million British thermal units from the current $6.1, according to an order from the oil ministry's Petroleum Planning and Analysis Cell (PPAC). Simultaneously, the price of gas from difficult and newer fields like the ones in Reliance Industries Ltd and its partner bp plc operated deepsea D6 block in KG basin, was hiked to $12.6 per mmBtu from $9.92, the order said.
Planning Commission deputy chairman Montek Singh Ahluwalia and former Planning Commission member Kirit S Parikh, who heads an expert committee on fuel pricing, may join the deliberations, official sources said.
Prices of natural gas, which is used to generate electricity, make fertiliser and is converted into CNG to run automobiles, is likely to rise to record levels at the rate review scheduled this week, sources said. The government-dictated price for natural gas produced in the country is to be revised on October 1. After factoring in the spike in energy prices witnessed in recent months, the rate paid for gas produced from old fields such as of state-owned Oil and Natural Gas Corporation (ONGC) is likely to rise to $9 per million British thermal units from current $6.1.
The government does not seem inclined, at least in the petroleum sector, to effect sudden and steep upward price revisions to tame its huge subsidy burden and rein in fiscal deficit.
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The Planning Commission will finalise in a couple of months a draft on an integrated energy policy, which will include its views on merger of oil public sector undertakings.
As fuel prices surged in September, the government's decision to ask companies to cut price by Rs1 each on a litre of petrol and diesel came as a dampner for private players.
To do so, the government will have to tackle a number of broad development challenges successfully, says Shankar Acharya
The ministry is preparing a draft note for consideration of the CCPA on pricing of diesel, kerosene and LPG, official sources said.
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