Gas producers decline as CCEA defers gas price hike

Shares of three gas production firms fell by 2.36% to 5.07% at 9:26 IST on BSE after the Cabinet Committee on Economic Affairs deferred the decision to hike gas price by three months.

ONGC (down 5.07%), Oil India (down 2.68%) and Reliance Industries (down 2.36%), edged higher.

The S&P BSE Sensex was down 56.15 points, or 0.22% at 25,257.59.

The Cabinet Committee on Economic Affairs (CCEA), on Wednesday, 25 June 2014, deferred domestic natural gas pricing guidelines for wider consultations.

The domestic natural gas pricing guidelines, which were announced on 10 January 2014 were later deferred due to the Model Code of Conduct that had been effected in the country at that time.

The CCEA decided that the comprehensive discussions were necessary on the issue and the guidelines. It was decided that consultations would be held with all stakeholders and it was important to keep public interest in mind.

Therefore, the CCEA has deferred this issue for a period of three months.

On 27 June 2013, the CCEA approved the proposal to hike the natural gas price to $8.4 per million metric British thermal units (mmbtu) from 1 April 2014, based on a formula arrived at by the Rangarajan committee. The new price was proposed to applied uniformly to all producers. CCEA had noted that Rangarajan committee’s formula for gas pricing would be valid for five years and gas prices were proposed to be revised quarterly from 1 April 2014 onwards.