Natural gas to be sold at $7 in new regime from the current regulated price of $4.20; cheer for Reliance, ONGC

Come 2014, the price of natural gas, a key input for many industries including power and fertiliser, will be raised under a new policy regime to $7 per unit from the current regulated price of $4.20. The system of a global average price being considered by the government will benefit domestic producers Reliance Industries and ONGC. The new price will be half that of LNG imported from spot markets at present. With domestic gas output stagnating, the share of imported LNG in the gas pool is bound to rise.Executives from power companies said they are willing to buy gas at this price as it is still cheaper than imported LNG. Fertiliser companies have held the view that the price of $7 will be viable only if it includes transportation.

Source: Infraline