(a) whether any criteria has been fixed for fixing sale price of gas in the country;
(b) if so, the details thereof;
(c) whether any deviation from the fixed criteria has been noticed; and
(d) if so, the details thereof and the action taken thereon, company-wise for the last
three years and the current year?
MINISTER OF STATE IN THE MINISTRY OF PETROLEUM & NATURAL GAS (SMT. PANABAAKA LAKSHMI)
(a) and (b) The price of Administered Price Mechanism (APM) and non-APM gas is fixed by the
Government. As regards New Exploration Licensing Policy (NELP) and Pre-NELP gas, its price
is governed in terms of the Production Sharing Contract (PSC) signed between the Government
and the contractor. Under the provisions of the PSCs under NELP regime and Coal Bed Methane
(CBM) Contracts, the Contractor shall endeavour to sell all Natural Gas and CBM produced and
saved from the Contract Area at arms-length prices to the benefit of Parties to the Contract.
The Government, as per the provisions of NELP and CBM Contracts, shall approve the formula or
basis on which Natural Gas and CBM Gas prices shall be determined.
Under the PSC regime, the contractor of KG-DWN-98/3 block had submitted a price proposal for
approval by the Government. This price proposal was considered by the Prime Minister`s Economic
Advisory Council (EAC) chaired by Dr. Rangarajan,which recommended that the proposed price
appeared to be in line with the PSC with small modification. The Government also constituted
a Committee of Secretaries (CoS) under the Cabinet Secretary to consider the gas supply and
pricing issues, which recommended that the government may consider framing a Gas pricing and
Gas Utilization Policy, before considering the price proposal. Various representations and
presentations were made by various stakeholders which were taken into account by these two
committees while giving their report.
The Empowered Group of Ministers (EGoM) was set up to decide on the utilization and pricing
issues of gas produced under New Exploration & Licensing Policy (NELP). The EGoM considered
the recommendations of the EAC and CoS and approved the price formula based on which the
current gas price for the natural gas produced from the above block works out to be US $
4.2 per mmbtu at crude price greater or equal to US $ 60 per barrel.
The EGoM followed the pricing principles/criteria incorporated in the PSC to decide on the
utilization and pricing issues of gas produced under New Exploration Licensing Policy (NELP)
and the pricing formula was not fixed in accordance with the provisions of the PSC.
In case of Pre-NELP PSCs, natural gas is sold on the basis of pricing formulae provided in the
respective PSCs.
(c) No deviation has come to the notice of the Government,
(d) Does not arise in view of reply to (c) above.