A report by brokerage firm Bank of America Merrill Lynch shows that government may get an additional revenue of $2.2 billion owing to its decision to double domestic natural gas price.
The government would use this additional revenue, which it may get through higher taxes and profit, to fund rise in subsidy, the report said.
The government may get about 65 per cent of ONGC-OIL's rise in revenue from gas price hike as higher royalty, income tax, dividend and dividend tax.
Oil and Natural Gas Corp (ONGC) and Oil India, state-owned oil explorers, account for bulk of natural gas produced in the country. These two firms may gain an additional Rs 18,100 crore ($3.1 billion) annually, the report shows.
Rise in KG D6 gas price of Reliance Industries would also boost government royalty and income tax revenue by $200 million, it said.
The Cabinet Committee on Economic Affairs (CCEA) had on June 27 approved raising natural gas prices from April 2014 to an average of prevailing rates at international benchmarks and cost of imported LNG into the country. The indicative price in April is likely to be $8 per million British thermal unit as against $4.2 currently.