According to some estimate, an increase in the price of natural gas by $1 would result in fertiliser plants taking a hit of Rs 3,155 crore per annum for producing 23 million tonne (mn t) of urea in 2013-14 and Rs 4,144 crore a year for 32 mn t from 2017-18.
As for the power sector, the the impact of every dollar increase in the price of natural gas would be about Rs 10,040 crore per annum for generating 28,000 mega watts power.
Union petroleum ministry wants the recommendation of the Rangarajan committee to be accepted with minor modifications so that prices are fixed in a fair manner and in a way that incentivises production.
The ministry is also said to be taking efforts to get the pricing in rupee terms as any depreciation in the Indian currency against the dollar would have a deep impact.
The Rangarajan committee has suggested pricing gas at an average of international hub prices and cost of imported LNG, instead of the present mechanism of market discovery.
The oil ministry wants the new pricing guidelines to apply from 2013 itself on all domestically produced gas, barring cases where it is either governed by a definite formula prescribed in a production sharing contract or where the government had previously fixed the tenure.
Reliance Industries, therefore, will get the new price only from April 1, 2014, upon expiry of the fixed five-year term of the current rate of $4.2 per mBtu.