New Delhi, Sep 28 (IANS) CNG and piped natural gas prices could face an increase this festive season if the government implements a new floor price mechanism for gas produced from domestic fields by companies such as Oil and Natural Gas Corporation (ONGC).
Sources said the petroleum ministry is considering a proposal under which domestic gas will have a floor pricing that would prevent fuel prices from crashing below an identified threshold in the current subdued market conditions and insulate oil and gas explorers like ONGC from a tariff crash.
Talks are on to link gas prices with price Japan-Korea Marker, a benchmark index used to determine LNG tariff in North Asia with a discount.
With JKM prices hovering over $ 5 million British thermal units (mmBtu) even with day $ 1 mmBtu discount, the Indian gas floor price under this formula will be close to $ 4 mmBtu. This is much higher than the government administered price of $ 2.39 mmBtu for the April-October, 2020 period. And if implemented, it could increase the cost for all gas consumers.
"Nothing has been finalised on having a gas floor price as of now. A panel in the petroleum ministry is looking at various options and the best course would be adopted that has little impact on consumers but also supports oil and gas companies with remunerative and sustainable gas prices."
The average cost of gas production for the country's largest public sector oil company ONGC is about $3.7/mmBtu, much higher than the current regulated price of natural gas at $2.39/mmBtu. This is expected to fall further to about $1.9/mmBtu for the next six months beginning October 1 under the current formula, sources said.
Lower gas prices is bad news for ONGC as it would mean further suppressed margins and losses. The company is set to lose close to Rs 6,000 crore on low gas prices this year, brokerages have said.
Brokerages have put ONGC's FY22E gas price at US$3.6-4.2/mmbtu depending on discount to JKM price if the new floor price is implemented. With Low L NG liquefaction capacity addition ahead, JKM spot futures for FY22-FY26E are expected at US$5.2-5.8/mmbtu vs US$4.7-4.1/mmbtu in FY20-FY21E.
Oil minister Dharmendra Pradhan had said earlier that India will phase out price controls in natural gas and make it market-linked soon.
By Qaiser Mohammad Ali
New Delhi, Oct 21 (IANS) Ruchir Modi, the only son of business tycoon and Indian Premier League (IPL) founder Lalit Modi, hopes that the family business dispute, now in the Delhi High Court would be resolved soon, expressing his "full faith" in the Indian judiciary.
In an exclusive interview with IANS, Ruchir, who is a stakeholder and occupies several key positions in the Modi group of companies, said that he hoped a judgment would be delivered soon to settle the Krishan Kumar Modi Family Trust issue, which is a bone of contention between various members of the clan. This issue arose after the death of KK Modi in November last year.
"I am hoping it will be resolved soon. I have full faith in the Delhi High Court and in the Indian judicial system. So, I am hoping that a judgement would be passed soon and we can move forward with the business and the business decisions that need to be made as soon as possible. I don't have a time frame around that," Ruchir, 26, told IANS from his London home.
"I am not a party to the case. But I am a beneficiary of the KK Modi Family Trust. Therefore, I am an interested party in the matter. But I am not fighting the case. The matter is still sub-judice so I can't really make a comment on it. The matter is currently before the Delhi High Court," he said.
Two factions in the KK Modi Group are not in agreement on the legal forum to approach vis-à-vis the sale of the estate and distribution of the proceeds. In March, the Delhi High Court had dismissed a plea filed by Bina Modi, wife of late KK Modi, to restrain her son Lalit Modi from starting arbitration proceedings in Singapore to settle the estate of her husband. Her other son Samir Modi and daughter Charu Bhartia have joined the case.
Ruchir is Executive Director in Modi Enterprises, Executive Director in the KK Modi Group, Director in Godfrey Phillips India Ltd, and Brand Head in FTV India. In Godfrey Phillips, he oversees Corporate Governance and the International Business Division. His current focus is on Godfrey Phillips and the settlement of the KK Modi Family Trust.
To concentrate on his business, Ruchir, a former president of the Alwar District Cricket Association in Rajasthan, has dissociated himself from cricket administration in India.
"My grandfather passed away in November last year (2019). Since then I am very, very busy in terms of company work as well as we are looking at settling the entire family trust and disinvesting all our businesses which is a big task on its own to disinvest companies like Godfrey Philips, Indofil Industries, and Modicare. They are all major corporates in India. That is taking a significant chunk of my time as well," he said.
The Covid pandemic has kept Ruchir away from India, but he plans to shuttle between London and India as soon as travel becomes convenient.
"For now, I am in London due to the Covid situation. I haven't actually come back to India, and London is obviously home to me and I am working out of here. Today, given the technology we have, we can work from anywhere in the world. But, to answer your question, I do plan to travel between India and London and spend most of time between India and London," he said.
Ruchir attended the American School in Mumbai, and after completing his 10th grade there, moved to The American School in London. He received a bachelor's degree in Global Business Management from Regents Business School London. Away from business, he is an avid traveller and has a keen interest in innovation, especially in the start-up sector.