Business Standard: Lack of pricing clarity to hit CBM firms

With India’s natural gas sector ready to usher a new pricing regime from April, existing coal-bed methane (CBM) companies are likely to feel the heat, as there is no clarity on those charging a higher gas price.

The uniform gas pricing formula will mean CBM players such as Great Eastern Energy Corporation Ltd (GEECL) and Essar Oil, which are drawing a higher price, will be paid a lower sum, according to the formula cleared by a panel headed by Prime Minister’s Economic Advisory Council chief C Rangarajan. According to the formula, the price of domestic natural gas is set to increase from $4.2 per million British thermal units (mBtu) to $8 an mBtu.

Ministry sources say companies such as Essar Oil and GEECL, which are selling at $9-22 an mBtu from their CBM blocks in West Bengal, will also be able to base prices on the Rangarajan formula. MORE