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Domestic gas output declining; price hike good for sector: Chidambaram

By Religare

Justifying the decision of government to double the price of natural gas produced in the country from next April, the finance minister P Chidambaram said that domestic gas production has been declining and the hike in prices will attract more investments in the sector.

"The gas pricing will promote investment in the sector and there is no reason to assume that prices will always increase," Chidambaram said adding that production will go up if investments are made.


Expressing concerns over falling output of gas, Chidambaram said imports of LNG have risen significantly as domestic production has declined sharply. He said that government will also soon fix the input price of gas and the pricing formula can also be changed, should the need arise.

About the burden on power sector due to gas price hike, Chidambaram said government will consider helping the power and fertilizer sectors to cope with the doubling of gas prices.

The new gas prices, based upon recommendations of Rangarajan committee, will give a boost to companies like ONGC, RIL, said experts. Though the government hasn't given exact details of the pricing, but experts are expecting the price would rise to USD 10 per unit and even higher in the coming years—sharp surge from around USD 4.2 per unit currently charged by RIL.

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Story first published: Friday, June 28, 2013, 22:50 [IST]
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