Days after approving lower than demanded gas price increase, Finance Minister Arun Jaitley has said the USD 5.61 per mmBtu rate will ensure explorers make profit but not windfall gain, reported PTI.
The increase in rate, approved the Cabinet Committee on Economic Affairs (CCEA) on Saturday, balances interests of oil and gas explorers and consumers, he said.
"It is a rational decision... Even at this (USD 5.61) price, the explorers are going to make profit. They won't have a windfall profit. At the same time, the burden of consumers will be minimal," he said.
"We balanced the decision where there is incentive for investment in the sector and at the same time the consumer is not overburdened," he told ET Now. "With this decision, the explorers may not make a windfall profit, they will make a profit."
Jaitley added that he was not against business. "Well it is a balancing act. I am not against business, or against big business. I don't consider profit a bad word. I think it is windfall profit that is a bad word. Therefore, this (gas price hike) ensures profit rather than windfall profit, at the same time this also factors into interest the aam aadmi."
The NDA government after coming to power twice deferred a decision on gas price hike, which was originally due on April 1, to hold wider consultations. A gas price increase will result in rise in cost of fertiliser production and hike electricity tariff as also CNG price.
Jaitley said the gas price decision was "professionally taken."
A committee of secretaries excluded the irrelevant factors in the Rangarajan formula, which was approved by the previous UPA government, and included the relevant.