India May Constitute New Panel to Study Gas Pricing

India's newly elected BJP government may constitute an expert panel to recommend a less-complex formula for pricing of domestically produced natural gas, reports Business Standard newspaper.

The previous government had approved pricing formula suggested by a panel headed by C Rangarajan. The new price regime was supposed to come into effect from April 1 but was deferred because of national elections.

"Rangarajan formula is too complex. It has variables that were questioned by stakeholders during the entire approval process in the previous government. This formula either needs to be simplified or replaced by a less complex one," Business Standard quotes an official privy as saying.

The official adds that if the new panel is constituted then implementation of new price formula may be delayed beyond May 1, the date oil ministry has given to Reliance Industries for implementation of new rate.

The Rangarajan pricing formula is based on the average of the prices of imported LNG into India and the weighted average of gas prices in North America, Europe and Japan in 12 months, the newspaper says.

The price of gas, according to this formula, comes to around $8.3 per million British thermal unit for April-June quarter, almost double the current price of $4.2.