Gas consumers like power, fertiliser and sponge iron plants, will pay Rs 2215 per 1000 SCM for natural gas, if at a calorific value of 10,000 Kilo Calories per SCM. Since the Oil and Natural Gas Corporation (ONGC) and Oil India Limited's (OIL) gas fields yield a fuel with a calorific value of roughly 9000 Kilo Calories, the effective price for the consumer will be Rs 1993 per 1000 SCM.

The concessional price for gas guzzling industries in the northeast is Rs 1274 per 1000 SCM. The actual price will, once more be lower, since the calorific value of the Oil India gas is roughly 9000 kilo calories.

The dip in gas prices, though marginal, now takes the effective consumer price down to almost the administered gas price levels prevailing three years ago. It is also very close to the Rs 2150 per 1000 SCM floor pricefixed for consumers.

The partial decontrol of gas prices in September last year allows gas to be priced within a range of Rs 2150 per 1000 SCM and Rs 2850 per 1000 SCM. Since then, gas prices only came close to the ceiling once in January.

The 12 per cent increase in natural gas prices for the January to March quarter, after the nearly 20 per cent hike in the previous three months, resulted in a selling price of Rs 2411 per 1000 SCM (for gas of 10000 kilo calories per SCM). The worldwide tumble in oil prices since, resulted in a crash in fuel oil prices and natural gas has cost less every three months since then.

Natural gas prices slid by nearly six per cent in the April to June quarter, dropping to Rs 2271 per 1000 SCM. Since then gas prices have knocked off a few rupees at every quarterly revision. Industry sources say the continued downtrend in fuel oil prices worldwide would have taken gas prices down to the floor of Rs 2150, had national oil companies not been granted a floor price as well. InApril, the ONGC, which produces more than 80 per cent of the gas sold at home, was granted a floor price of Rs 1650 per 1000 SCM, which was the administered price prevailing before October last year.

Since the semi-free gas prices are computed for a higher calorific value, the notified floor price for ONGC is Rs 1800 per 1000 SCM (at 10,000 kilo calories.) The complicated mechanism that goes into determining gas prices every quarter take both the floor price for the consumer and the producer into account.

Oil India Limited gets reimbursed for its lower producer price (now pegged at Rs 1274 per 1000 SCM) from the gas pool account. The pool account gets Rs 250 crore from the returns from gas sales every year, which is used to reimburse Oil India for the concessional price paid to gas users in the northeast.