The Union Cabinet is likely to take up the gas pricing issue in its upcoming meeting, sources with knowledge of the matter told CNBC-TV18.

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Sources said that the cabinet could meet on Thursday or later this week.

The government has already announced a provisional gas price of $8.57 per mmBtu, which will remain until further notice. However, in case the Kirit Parikh committee recommendations are accepted, gas prices could see a downward revision.

In anticipation of the same, shares of City Gas Distributors Indraprastha Gas and Mahanagar Gas are trading with gains of 2-4 percent in Wednesday's trading session.

The committee's proposals include a fixed pricing band for gas from legacy fields, which make up two-thirds of all natural gas produced in the country. This would provide a predictable pricing regime for producers and help to moderate the prices of CNG and piped cooking gas, which have risen by 70 percent since last year due to an increase in input costs.

The panel has also suggested linking the price of gas produced by state-owned firms from fields given to them on a nomination basis to imported crude oil prices, rather than benchmarking them to gas rates in international markets. This would mean that state producers like ONGC and Oil India would be paid a price linked to imported oil, with a minimum or floor price of $4 per mmBtu and a cap or ceiling price of $6.50 per mmBtu.

Gas from legacy fields is sold to city gas distributors who had to raise rates of CNG and piped cooking gas by over 70 percent after prices went up reflecting a surge in global rates.

However, city gas will continue to get top priority in the allocation of APM gas. The sector will be in the 'no-cut' category, meaning supplies to other consumers will be cut first in case of a decline in production.

As per Kirit Parikh committee’s recommendations, the ceiling rate for this gas from legacy or old fields, called APM gas, will be increased by $0.50 per mmBtu annually. From January 1, 2027, the panel has suggested market-determined pricing of APM gas.

In an interaction with CNBC-TV18 on Monday, Kirit Parikh had expressed optimism that a majority of his recommendations would be accepted by the cabinet. "I have heard from people that yes, the cabinet is considering it, it's likely to be approved. But when it will be is anybody's guess," he said.

Also, talking about oil demand, in an interview with CNBC-TV18, Sushant Gupta, Director of Wood Mackenzie said, “We estimate that Q2 would be a much more stronger demand growth. So, our current estimate stands around 2.8 million barrels per day of demand growth for Q2.”

First Published:Apr 5, 2023 11:39 AM IST