Friday, June 24 2005 16:07 Hrs (IST) - World Time -

New Delhi: Natural gas price will go up by a minimum 12 per cent from July 1, raising the cost of production of fertilizer, power, steel and petrochemicals.

Petroleum Ministry on June 20 issued an order increasing consumer price of gas for power and fertilizer units to Rs 3200 per thousand standard cubic meters per day from Rs 2850 per thousand standard cubic meters presently.

The same for other sectors has been raised to level of the landed price of LNG - $3.86 per million British thermal unit (Rs 6740 per thousand standard cubic meters per day), officials said.

India's largest gas produced Oil and Natural Gas Corp (ONGC) will get an additional Rs 1600 crore revenue from the increase in gas price and on be exempt from subsidising the price of gas produced by joint venture and private firms.

The 12 per cent rise in feedstock cost would result in rise in power tariff by Rs 0.67 per unit.

"Fuel bill of power and fertilizer units will go up by Rs 17 crore per annum for every million standard cubic meters per day of gas consumed by them. For petrochemicals, steel and other industries, the fuel bill will rise by Rs 135 crore for every mmscmd of gas consumed," an official said.

The increase in gas price would hit Reliance Industries, Essar Steel and state-run gas firm GAIL. GAIL's revenues would be hit by about Rs 650 crore due to increase in cost of gas it uses for production of petrochemicals.

Transport sector, industries in Agra/Ferozabad and small consumers (consuming less than 0.05 million standard cubic meters per day) have been spared from an immediate hike.

The Cabinet Committee on Economic Affairs (CCEA) had on May 19 approved an ad-hoc increase in natural gas prices.

Natural gas price for the north-east sector would be 60 per cent of the new price, officials said.

The biggest beneficiary of the decision would be ONGC, the country's largest gas producer, while input cost for power and fertilizer units is set to rise.

Of the 88.1 million standard cubic meters per day of natural gas available in the country, 55.1 million standard cubic meters per day is subsidised (presently priced at Rs 2850 per thousand cubic meters per day).

Of this, power units consume 23.4 mmscmd and fertilizer units 14.7 mmscmd and these units would now be charged Rs 3200 per thousand cubic meters per day price.

Sponge Iron units consume 2 mmscmd subsidised gas and other industries like petrochemicals plants use 15 mmscmd of subsidised gas. These units would pay market price from now.

Small industries in Agra/Ferozabad consume 0.87 mmscmd and transport sector in Delhi and Mumbai 2.5 mmscmd and these would continue to pay the current price for next 3-5 years.

Official said on the new price of Rs 3200 per thousand standard cubic meters, a royalty of Rs 320 and a 12 per cent tax would be added to arrive at a consumer price of Rs 3942 per thousand standard cubic meters.

Similarly, for other industries, the consumer price would be Rs 7545 per thousand standard cubic meters after adding tax.