Natural gas prices to near double from April 1, 2014

Indian government on Thursday approved the Rangarajan pricing formula of natural gas prices and as per the development; from April 1, 2014 natural gas prices will be near doubled to $8.4.

As the new prices come into effect from next year, power tariff, urea costs and CNG prices are sought to go high too. The proposal from the Indian oil ministry was at last approved by Cabinet Committee on Economic Affairs (CCEA), which is headed by the Prime Minister himself.

The Ragarajan formula, which comes from PM’s economic advisor C. Rangarajan, is a complex formula based on liquid gas imports contacts and international trading standards.

This is the first time in last 3 years, the natural gas prices got its first revision. As per the suggestion of Rangarajan panel, the gas prices were to be revisited every month from April 1 next year. But the oil ministry has expanded the revision to quarterly intervals.

As the new guidelines come into effect from next year, it is expected that the natural gas prices will be $10 by 2015. The revision of prices is hugely criticized by opposition parties of India and by Ministry of Power and Fertilizer as well.

The reason behind the revision of has prices was explained as a method to incentivize petroleum exploration and at the same time bringing revenue to the government.

While Indian people were already in trouble due to inflation, increasing petrol prices and electricity charges, these new guidelines will increase their burdens and the farmers will also have the same fate.