New Delhi, July 17: The revision in gas rates from April next year will boost investor sentiment in a sector where investments have almost dried up, Petroleum Minister M. Veerappa Moily said Wednesday.
Speaking at an industry association Assocham seminar here, the minister said with the Directorate General of Hydrocarbons finding the current rate of $4.2 per million British thermal unit (mmBtu) uneconomical to produce gas from deep-sea fields, gas price revision will be a booster to augment investment in the oil and gas sector.
People in the country, therefore, should understand the necessity of the hike decision, he added.
The government has approved pricing of domestically produced gas at an average of the cost of LNG imported into India and international hub, or market, rates - a formula suggested by the C. Rangarajan Committee constituted by Prime Minister Manmohan Singh to look into issues concerning the oil and gas sector.
The oil ministry has announced that applying the Rangarajan formula, the price for gas for the April-June quarter of this fiscal comes to $6.83 per million British thermal unit (mmBtu).
The government has taken a number of other measures to boost investment and accelerate exploration, including allowing exploration work in mining lease areas, and securing defence clearance to long pending blocks, Moily said.
Speaking on the occasion, Petroleum Secretary Vivek Rae said the government is going to institute the Open Acreage Licensing Policy soon to facilitate faster exploration.