New Delhi, July 23: A Group of Ministers (GoM) today recommended a Rs 350 per thousand cubic meters increase in domestic natural gas prices to Rs 3200 per thousand cubic meters. The GoM also suggested increasing HBJ gas pipeline transportation charges to Rs 1160 per thousand cubic meter per day from Rs 1150 per thousand cubic meters per day.

The recommendations will now go to the cabinet for approval, highly placed sources said. The new price, which will be applicable for natural gas produced by Oil and Natural Gas Corp and Oil India Ltd from current fields, will remain static for next six months.

However, the two state-run firms will have the freedom to sell gas from joint venture fields like Tapti offshore field at market determined price.

In the meantime, a tariff committee would be set up to study the costs and suggest reasonable price for the period till complete deregulation of gas prices came about. Sources said the recommendation of GoM if accepted by the cabinet would bring windfall gains for ONGC which till now was subsidising gas produced by private firms.

Under the current policy, gas produced by ONGC and oil is capped at Rs 2,850 per thousand cubic meters. Gas produced from joint venture fields like Ravva, Cairn Energy of UK (operator of the field) is paid international price while ONGC sells the same gas to its customers at the cap price, thereby providing a subisidy of Rs 1300 crore annually.

"ONGC got a net of Rs 2150 per thousand cubic meters for the gas. With this, the company will not have to pay the differential," they said.

Bureau Report