Telecom Minister Ravi Shankar Prasad says gas pooling will help save Rs 1,550 crore in subsidy and also benefit 30 urea plants
New Delhi : The Cabinet approved a proposal to pool or average out prices of domestic natural gas and imported LNG used by fertiliser plants to make the cost of fuel uniform and affordable.
Fertiliser plants consume about 42.25 million standard cubic meters per day of gas for manufacture of subsidised urea. Out of this, 26.50 mmscmd comes from domestic fields and the rest 15.75 mmscmd is imported liquefied natural gas (LNG). The USD 5.18 per million British thermal unit price of domestic gas is about half the cost of LNG.
Briefing reporters about the decisions taken by the Cabinet headed by Prime Minister Narendra Modi, Telecom Minister Ravi Shankar Prasad said gas pooling will help save Rs 1,550 crore in subsidy and will benefit 30 urea plants.
The cost of gas, which is the most important component for production of urea, varies from plant to plant owing to differential rates at which imported LNG is contracted as well as cost of transportation. The Cabinet Committee on Economic Affairs (CCEA) has approved averaging of different rates of domestic and imported gas to ensure supply of fuel to all urea plants at a uniform delivery cost. This would help in focusing on improving plant efficiency and may help in price advantage in sourcing of LNG, he said. The move would help bring down the cost of fuel and help save subsidy. Sources said the oil ministry had proposed making state-owned gas utility GAIL India Ltd as the pool operator.
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Gas price cut 8% to $4.66
Natural gas prices were cut by about 8% to $4.66 per million British thermal unit from April 1 to September 30 on gross clarofic value basis (GCV) as opposed to USD 5.05 per mmBtu currently. a unit to reflect the softening global prices, a move that will lower electricity and fertiliser costs.
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