New Delhi, June 12: The petroleum ministry has proposed a 12.5 per cent increase in the price of natural gas sold by the ONGC and Oil India Ltd to power and fertiliser units.

If the move comes through, the gas price for power and fertiliser units will go up to Rs 3,600 per thousand cubic metres from Rs 3,200.

“We asked for the Tariff Commission’s recommendation on pricing. The commission has given its report. We will go to the cabinet next month on the pricing of administered gas,” petroleum secretary M.S. Srinivasan said.

Gas from the ONGC and OIL fields is sold at a government-fixed rate, which is much lower than the prices charged by private companies such as Reliance.

However, the fertiliser and power ministries are expected to oppose the move as it would raise the cost of production of the units under their domain. Fertiliser and power companies also sell at regulated prices to consumers.

According to the fertiliser ministry, the subsidy burden being borne by the government will go up if the price of gas is increased. The power ministry also feels that the price rise will put pressure on power plants as the higher cost of production cannot be passed on to consumers.

ONGC and OIL produce around 40 million cubic metres of gas a day. It is supplied mainly to power and fertiliser units and to public transport utilities in cities to check pollution. The yield from the ageing fields has been falling and is expected to come down to 29.6 million standard cubic metres a day by 2009-10.

Natural gas sold to private companies in other sectors was raised to $3.86 per million British thermal unit in July 2005.

This is the landed price of liquefied natural gas. This works out to Rs 6,740 per mmscmd and the price is expected to go up again.

The earlier increase has been approved by the cabinet committee on economic affairs on an ad hoc basis. The Tariff Commission will examine in detail the cost of production and transportation of the gas before fixing a final price.