Govt deferred decision on gas price hike due to elections, says Pradhan
Moneylife Digital Team 25 September 2014

The CCEA deferred a decision on revising natural gas prices by 45 days to 15th November due to elections, says Dharmendra Pradhan

 

The Indian government deferred an increase in natural gas price for a third time in view of next month’s Assembly elections in Maharashtra and Haryana.

 

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday deferred a decision on revising natural gas prices by 45 days to 15th November.

 

Oil Minister Dharmendra Pradhan said, “It was done due to elections.”

 

He, however, did not say if the decision was postponed because of model code of conduct being in place or to avoid the fallout of the price increase on power tariff and CNG rates.

 

Every dollar increase in gas price will lead to a Rs1,370 per tonne rise in urea production cost and a 45 paise per unit increase in electricity tariff (for just the 7% of the nation’s power generation capacity based on gas).

 

Also, there would be a minimum Rs2.81 per kg increase in CNG price and a Rs1.89 per standard cubic meter hike in piped cooking gas.

 

Assembly elections to the 288-member Maharashtra Assembly and 90-seat Haryana Assembly will be held on 15th October and the counting will take place on 19th October.

 

Apart from these states, bypolls will be conducted on the same day for five Assembly seats in five states —— Arunachal Pradesh, Manipur, Nagaland, Uttar Pradesh and Gujarat.

 

By-elections for two Parliamentary constituencies in Maharashtra’s Beed and Odisha’s Kandhamal will also be held on 15th October.

 

The UPA Government had in June last year approved a price formula suggested by a panel headed by C Rangarajan and re-confirmed it in December 2013 with certain conditions for Reliance Industries’ eastern offshore KG-D6 block.

 

The formula was to be implemented from 1 April 2014 but before a rate could be notified, general elections were announced and the Election Commission asked the then government to defer it till the completion of polls.

 

On 25th June, the new BJP-led Government deferred it for a further three months as it found doubling of rates as per the approved formula unpalatable.

 

Earlier, Pradhan had told Parliament that a new gas price will be announced by September-end.

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