In its presentation to the committee of secretaries (CoS) on Tuesday, major gas seller ONGC Ltd argued for market-based pricing for natural gas on the grounds that the controlled price regime under which it sells nearly 70% of supply in the market hurts its finances.
This reiterates the fact that the pressure from buyer industries, such as fertilizer and power, based on the controlled pricing (administered pricing mechanism, or APM) sentiment is not in tune with market realities.
Couldn’t the highly politicized playout over Reliance Industries Ltd (RIL) gas been avoided? After all, the RIL-government hydrocarbon production contract signed in 2000 allowed for sale of gas based on a price discovered in the marketplace. Given how populist politics is tough to avoid—one reason why the CoS was form-ed—a regulator for gas pricing could have been put in place before the-se contracts were signed. Buyer pressure in ministerial voices could have thus been avoided.