According to sources, the decision was taken by the Petroleum Ministry on Thursday in order to work on a new price mechanism for gas which is produced from domestic fields.

As per reports, the new price mechanism will help to monetize the discoveries of Gujarat State Petroleum Corporation in Deendayal block and Reliance’s discoveries in Cauvery.

As mentioned earlier, the new price will be applicable to RIL only after meeting the shortfall in production of gas of 1.9 trillion cubicle ft (TCF) to be delivered at the earlier price. The Oil Ministry said that the new prices will come into effect only after the production of 2.5 TCF.

The government’s decision to disallow a price recovery of USD 579 million to Reliance’s is mainly to deal with the issue of shortfall in production of gas from D-1 and D-3 field in KG-D6 basin.

At the same time, another report said that the government is yet to decide on the issue of gas prices.

It needs to be mentioned that Finance Minister Arun Jaitley came out with a studied answer on the issue.

He said that the previous United Progressive Alliance (UPA) government had taken a decision to price natural gas based on the Rangarajan Committee Report. "The present government was asked to reconsider because the Election Commission had put that issue to a stop," he added.

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