New Delhi, 19 September Oil and Natural Gas Corp (ONGC), the nation’s largest oil and gas producer, has sought a 40% increase in the price of government-regulated natural gas to justify the investment it is making.
“We are hoping price of APM (Administered Price Mechanism) gas will be raised to Rs 4.5 per cubic meter (excluding royalty) from Rs 3.2 per cubic meter currently,” ONGC Chairman and Managing Director R S Sharma told reporters here.
The Tariff Commission had in May this year recommended a base minimum producer price of Rs 3.6 per cubic meter (2.21 dollars per million British thermal unit). “The Tariff Commission had stated that the market had a capacity to pay prices higher than their recommendation.”
ONGC loses around Rs 700 crore annually for selling 47-48 million standard cubic meters per day of natural gas below the cost of production.
“There has been an in-principle agreement (in the Government) that ONGC deserves higher gas price. We are awaiting final decision now,” he said, adding that the company would gain Rs 2,000 crore annually in revenues if prices were raised.
“We hope we should be able to get a fair deal as the Reliance issue has been resolved, and we expect the government to soon take a decision on this,” Sharma said. “We hope to get the market price for new gas.”
An ONGC official said the company was expecting an increase in gas price to a minimum of Rs 4.1 per cubic meter (excluding royalty). Together with 10% royalty, this would translate into a consumer price of Rs 4.5 per cubic meter (2.5 dollars per mBtu). The current price of Rs 3.2 per cubic meter (1.97 dollars per mBtu) is also excluding royalty.