India Raises Gas Price To $5.61 Per Unit, Deregulates Diesel (Intro Roundup)

NEW DELHI: Taking major decisions impacting the hydrocarbons sector, India's federal cabinet Saturday made the long awaited revision in domestic natural gas prices, deregulated diesel and remodified the scheme to give direct cash to consumers on subsidy for cooking gas.

The cabinet also approved other projects related to infrastructure, including a metro rail project in Ahmedabad, highway projects worth 1,476.56 crore, as well as a productivity linked bonus for railway employees.

In what could be seen as a setback for private hydrocarbon explorers, the government said natural gas prices were being revised to $5.61 per unit as opposed to the industries demand for atleast doubling it to a little over $8 per unit.

Speaking to reporters after the cabinet meet, Finance Minister Arun Jaitley said: "The original natural gas price was $4.2 per unit; Rangarajan Committee has followed a particular criteria and announced a price of $8.4 per unit, which was to be implemented from April 1, 2014, which implementation was halted by the Election Commission so that the new government can take a view on the matter."

"We reviewed the entire criteria. We looked at the various hubs which has been considered. We also looked at the various hubs which has been ignored. The cabinet approved the report of Secretaries Committee. The price now fixed is $5.61 per unit," he added.

"As per the formulation approved by the CCEA today, upward revision in gas prices will be approximately 75 percent less as compared to the price arrived at using Rangarajan formula," said the Cabinet Committee on Economic Affairs release.

Regarding the new price applying to gas from the Reliance Industries' (RIL) fields in the eastern offshore, the statement said that as the matter was under arbitration, RIL would be paid the earlier price of $4.2 per unit till the shortfall quantity of gas is made good.

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