NEW DELHI (TIP): The Narendra Modi government on June 25 indicated that it would not be guided by the UPA’s formula by deferring for three months a decision on revising price of gas produced from domestic fields. “The Cabinet Committee on Economic Affairs has decided that comprehensive discussions were necessary on the issue.

It was decided that consultations would be held with all stakeholders and it was important to keep public interest in mind,” oil minister Dharmendra Pradhan said on Wednesday. The decision allows a temporary reprieve to consumers from an increase in CNG and PNG prices.

But it would disappoint gas producers such as state-run ONGC and private sector Reliance Industries and its partner BP plc, which has served an arbitration notice on the government. The UPA’s formula was suggested by C Rangarajan, then head of PM’s Economic Advisory Council. Based on the complex formula, the price of gas from all domestic fields would have more than doubled to $9.3 per unit from $4.2 at present from April.

The formula became contentious as it would have resulted in a hefty increase in CNG, PNG and power costs as well as the government’s fertiliser subsidy. The implementation of the formula hit the Election Commission barrier, leaving it to the new government.

Sources said a concern surfaced during extended discussions Pradhan had with the Prime Minister’s Office and finance minister Arun Jaitley that announcing the revision would signal the Modi government toeing the UPA’s formula, even when a lower price was worked out by tweaking Rangarajan’s pricing parameters. “Rangarajan formula is not sacrosanct for the Modi government. It can modify or reject it,” one source said.

ToI had on June 13 reported that the government may opt for a relook at the formula and appoint a fresh panel. But neither Pradhan nor law minister Ravi Shankar Prasad, who briefed reporters, would not not say whether a new formula was being considered or the Rangarajan formula will be amended to bring down the rates to acceptable levels.

“The matter needs extensive consultations keeping the public good in mind with all the stakeholders… the new government must be given time to take a call on what should be the mechanism (of review),” Prasad said. Finance minister Arun Jaitley said the review mechanism would be decided by the Prime Minister’s Office and the oil ministry. “There have been one or two meetings. The mechanism in the government which will review the whole thing and come to an opinion, I think now needs to be finalised,” agency reports quoted the FM as saying.