The Government seems to be on a roll with regard to fuel price reforms. After partial decontrol for diesel, it's the turn of gas prices. Close on the heels of the Rangarajan Committee's report, natural gas prices are likely to see more than two fold hike soon. The new gas pricing will be an average of global hub prices and cost of imported LNG. It may apply from 2013 itself on all domestically produced gas except cases where it is either governed by the Production Sharing Contract or the government had previously fixed tenure for the same.

The move is a double edged sword. It will mean rising bills for users, especially power and fertilizer sector that have been using subsidized gas. Still, for companies like Oil and Natural Gas Corporation Ltd. (ONGC) and OIL India, it will be nothing less than a game changer. The domestic gas sector is tracing a backward path because of fixed domestic gas pricing that has led to unviable economies in the segment. A better gas pricing will incentivize investment in domestic gas sector. While high gas prices will fuel inflation in the beginning, with proper implementation, they can prove to be a win-win scheme for all stakeholders in the long term.