MINISTER OF STATE IN THE MINISTRY OF PETROLEUM & NATURAL GAS (SHRI JITIN PRASADA)
(a) & (b): Prior to 30-01-1987, gas prices were not administered by the Government and
ONGC used to determine gas prices based on thermal equivalence of alternate fuels used by
consumers. The prices charged by ONGC during the period 01-04-1979 to 29-01-1987 were disputed
by 19 consumers in Gujarat, who formed ‘Association of Natural Gas consuming Industries of
Gujarat’. The said Association filed a Writ Petition before Hon’ble High Court of Gujarat
in 1979, which on 30-07-1983 accepted the petition and set aside the price determined by ONGC.
ONGC filed Civil Appeal against the order of the Hon’ble High Court in the Hon’ble Supreme Court
in September 1983. The Hon’ble Supreme Court vide its order dated 04-05-1990 set aside the order
of the Hon’ble High Court and upheld the pricing basis adopted by ONGC for the period prior to
30-01-1987.
(c): Keeping in view enhanced gas availability from Western Offshore fields of ONGC and in
order to promote the utilization of natural gas and protect investments by various players along
the gas chain, Government decided to administer gas price with effect from 30-01-1987. In the
1987 pricing order, ONGC gas price was fixed at Rs.1400 mscm (thousand standard cubic metres)
on cost plus basis.
(d): Based on the average refinery transfer price of Fuel Oil at Mumbai in 2008-09 and
the thermal equivalence of Fuel Oil & natural gas, price of ONGC’s natural gas on the basis
of the above pricing mechanism would have been US $ 12.94/mmbtu. This is considering energy
content of Fuel Oil & natural gas at 10,000 kcal/kg & 10,000 kcal/scm respectively and
exchange rate of Rs. 45/US $.
(e): As against the above, price of APM gas is Rs.3200/ thousand standard cubic metres(mscm) (US $ 1.79/mmbtu) for power & fertilizers customers and Rs. 3840/mscm (US $ 2.15/mmbtu)
for small scale customers and city gas entities.
