 NEW DELHI: A day after the government approved a formula that would see domestic gas prices double to $8.4 a unit from April 1, finance minister P Chidambaram on Friday indicated that the government was ready to moderate the fuel's price for power and fertilizer industries to cushion consumers. "At the moment, we are fixing only output prices (rates payable to gas producers). This will indeed have impact on the consumer, but those prices are not being fixed today... What is the price at which it should be supplied to a power plant, to a fertilizer plant in order to make power affordable, fertilizer affordable... that can still be decided between now and April 1," the minister said. Stating that the government was conscious of keeping power and fertilizer prices low, Chidambaram said, "It could be tweaking prices or it could be bearing additional subsidy. There are various methods but at the moment, we are not addressing those issues." The power and fertilizer ministries had opposed the formula, suggested by a panel headed by PMEAC chairman C Rangarajan, saying gas price beyond $5 per unit would push up power tariff to a prohibitive Rs 6.40 per unit. Higher subsidy could upset the government's plan to prune its deficit but that's a problem that the next finance minister has to deal with. The finance minister's statement is thus being taken as an expression of the government's willingness to raise the subsidy on fertilizers, though he did not commit to giving subsidy. But some industry watchers say the need for subsidy may not arise since gas-fired capacity, including those coming up in the next few years, would account for only 28,000 MW of the total generation capacity of over 2 lakh MW in the country. "If the power from gas-fired stations are pooled with coal or hydel sources, the net impact on per-unit tariff would be negligible. NTPC does this when it runs its gas-fired plants on imported liquid gas that costs $12-14 per unit. Besides, if the indices in the formula come down, the price of gas too would come down," an industry source said. Chidambaram also rejected allegations that the gas price hike decision was made to benefit private sector, especially Reliance Industries . "We are not being influenced by anyone. If at all we are being influenced, we are influenced by the reality of the economy. Economic reality is that we have to produce more gas and only way it can be done is to bolster investment." Chidambaram said investment in domestic oil and gas hunt had dramatically fallen in absence of remunerative prices, resulting in sharp dip in production that was being made up through costlier imports. Oil minister M Veerappa Moily said most of the benefit from gas price increase will flow to public sector firms like ONGC and OIL, which account for two-thirds of domestic output. Petroleum secretary Vivek Rae said while the burden of the gas price increase on power and fertilizer sector would be about $1 billion annually, $500 million would accrue to the government by way of royalty, profit-share, taxes and dividend.  via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFdacxPRipU31589DHa6xaK5cysqw&url=http://timesofindia.indiatimes.com/business/india-business/Chidambaram-hints-at-gas-subsidy-for-power-fertilizer/articleshow/20825200.cms | |||
| | |||
| | |||
|
0 comments:
Post a Comment