Great Eastern Energy Corp (GEECL) took objection to the government's move to bring all forms of natural gas under the pricing regime suggested by the Rangarajan committee formula and approved by the cabinet recently.
This essentially means that the coal bed methane (CBM) gas produced from coal seams would also come under the pricing formula suggested by the Rangarajan committee.
The firm currently produces around 20 million standard cubic feet (mmcsfd) of gas a day with 144 wells drilled on its Raniganj (South) block in West Bengal.
GEECL feels that the government is trying to control the CBM industry by saying that the new gas pricing policy applies to all gas. But according to GEECL contract with the government, the firm is already charging market determined, that is arm's length price, a top official of the firm has reportedly told a media.
The oil ministry has announced that applying the Rangarajan formula to the price for gas for the April-June quarter of this fiscal comes to $6.83 per million British thermal unit (mmBtu).
But GEECL sells CBM gas to customers at around $12 mmBtu after taking into account charges for compression, distribution and marketing.