Govt panel to recommend price cap for ONGC gas

New Delhi: A government-appointed gas price review panel, led by Kirit Parikh, is likely to recommend price caps for natural gas produced from legacy fields of state-owned firms to help moderate CNG and piped cooking gas rates, while keeping the pricing formula for difficult fields unchanged.

The panel, which was tasked with suggesting a "fair price to the end-consumer" while ensuring "market-oriented, transparent and reliable pricing regime for India's long-term vision for ensuring a gas-based economy", may opt to suggest two different pricing regimes, officials said.

For the legacy or old fields of Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) - where the cost has long been recovered and which are currently governed by a formula that uses rates in gas-surplus nations such as the US, Canada and Russia - the committee is likely to recommend a floor or minimum base price and cap or ceiling rates.

This would ensure that prices do not fall below cost of production, as they did last year, or do not spike to record levels as currently. Gas from legacy fields is sold to city gas distributors who had to raise rates of CNG and piped cooking gas by over 70 per cent after prices went up from $2.90 per million British thermal unit till March to $6.10 in April and further to $8.57 last month, reflecting a surge in global rates.