Panel proposes GST for natural gas; recommends compensation to states for 5 years

A committee headed by Kirit Parekh has submitted its recommendation on gas pricing formula to the government on Wednesday. In an exclusive chat with Zee Business, Chairman of the Sustainable Gas Pricing Committee gives detailed insights.

He said that there are 12-13 types of gas fields in India and each has a different gas pricing formula. The committee has simplified the formula.

The main problem was with respect to APM (Administered Price Mechanism) gas where fields were allocated to ONGC and OIL without any royalty or any profit sharing many years back, he said. The government owns nearly 57 per cent stake in these fields.

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The gas from these fields were given to consumers at a very subsidized rate, he further said. In view of this we have suggested a floor price of USD 4/mmBtu while the maximum price at USD 6.5/mmBtu.

The upper limit will be raised by USD 0.5 every year. The proposal is to implement this from 1 January 2027.

In other gas fields there is a pricing freedom, where there is an upper bound and the committee has suggested that the upper bound should be removed from 1 January 2026. This will give them full freedom to set prices and make marketing strategies.

The committee has also recommended bringing natural gas under the ambit of Goods and Services Tax (GST). Parekh said that it is important to bring natural gas under GST as all other commodities have been brought in its purview.

He said that it will bring transparency.

He further said that Gujarat, Maharashtra and Andhra Pradesh have voiced their reservations arguing that their income will fall as a result of this.

He said that a consensus be made with states on this.

See Full Tweet Here:

#NaturalGas को GST में लाने पर राज्यों को 5 साल के लिए मुआवजे की सिफारिश, गैस प्राइसिंग फॉर्मूला पर सिफारिश पेट्रोलियम मंत्रालय को सौंपी...

देखिए Sustainable Gas Pricing कमेटी के अध्यक्ष किरीट पारिख से खास बातचीत...@VarunDubey85 @HardeepSPuri #KiritParikh pic.twitter.com/Br6oIjqeHH

— Zee Business (@ZeeBusiness) November 30, 2022

A suggestion was also given that Centre compensates for the losses of the states for five years.

Energy stocks were in action with IGL topping the charts.

He also suggested priority be given to fertilizer companies and City Gas Distribution companies (CGDs) in allocating APM gas.