‘Improving gas supply needed, not gas price review’(Lead)

September 25th, 2008 - 10:07 pm ICT by IANS  

New Delhi, Sep 25 (IANS) Petroleum Secretary R.S. Pandey Thursday ruled out a reassessment of the administered price mechanism for gas in the near future, saying improving its supply was a more important priority for the government.”The first thing is to improve supply, then once it becomes a buyer’s market, price can find its own balance,” Pandey said on the sidelines of an industry conference on the gas scenario in India.

The two-day conference on ‘Gas in India - Issues, Opportunities and Challenges’, has been organised by two Delhi-based think tanks, Observer Research Foundation and Indian Energy Forum.

According to him, pricing of gas is a “very difficult area” in India as differential prices are based not just on the category of consumers but also the category of producers.

The government regulates the price of gas produced by the state-run Oil and Natural Gas Corp (ONGC) and Oil India Ltd.

Last week, ONGC chairman R.S. Sharma had said his company is losing Rs.70 million annually as it had to sell gas at $2.1 per million british thermal units (mmbtu), and wanted it to be allowed to sell at least at $4.21, the rate approved for Reliance Industries for its offshore gas from the Krishna-Godavari basin.

Pandey said the government in future could look at competitive price based on the content of gas per mmbtu and carbon content in the context of global warming, but added: “These are currently academic discussions.”

The mmbtu is a measure of heat created by burning any material.

Earlier, in his speech at the conference, Pandey said: “Where is the competition now? How can the price be fair when the market is controlled by the suppliers?”

“In such a scenario, the government will have to determine the pricing formula of gas to balance the interests of both the suppliers and consumers,” he said.

The petroleum secretary said the government control over pricing would help prevent any hardship to the vast majority of individual consumers besides accentuating growth in the sector.

He added that negotiations were on for starting two transnational pipelines to source gas from Iran and Turkmenistan. “The talks are going on well, are on the right track. But I don’t want to set a timeline because other countries are also involved,” he said.

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