ONGC, OIL may hike gas price by 33%

The Petroleum Ministry has proposed a 33 per cent hike in the price of natural gas produced by ONGC and Oil India and gradually increase it to $4.20 per mmBtu set for gas from Reliance Industries' KG-D6 fields.

The Ministry has circulated a Cabinet note for raising price of gas under administered pricing mechanism from Rs 3200 per thousand cubic meters ($1.8 per mmBtu) to Rs 4,250 per thousand cubic meters ($2.4 per mmBtu).

Price of APM, or the gas produced from fields given to ONGC and OIL on nomination basis, is proposed to be raised in stages to Rs 7,500 per thousand cubic meters or $4.2 per million British thermal unit by 2013, official sources said.

The price set for RIL's eastern offshore KG D-6 gas ($4.2 per mmBtu) is being considered as the benchmark for market price of indigenously produced gas in the country, they said.

Producer price for ONGC is proposed at Rs 3,870 per thousand cubic meters from Rs 3,200 per thousand cubic metre. The consumer price would be 10 per cent higher than this.

For OIL, the producer price has been proposed at Rs 4,310 per thousand cubic metres, they said.

Sources said the proposed prices are in line with the Tariff Commission recommendation, which in 2005 suggested a producer price of Rs 3,600 per thousand cubic meters to ONGC and Rs 4,040 per thousand cubic meters to OIL. On top of this, the price would change by Rs 55 per thousand cubic metre for every 10 points change in Wholesale Price Index. WPI has risen by 49 points since the TC recommendation.