Union Cabinet approves Gas Price Hike

Oil & Gas stocks like Reliance Industries, ONGC and Oil India Ltd are trading high on Friday after the Cabinet Committee of Economic Affairs (CCEA) announced to hike gas price to $8.4 per million metric British thermal units (mmBtu), effective from April 1, 2014 for five years.

The cabinet approved the Oil Ministry’s proposal on Thursday suggested by a panel headed by Prime Minister’s economic advisor C Rangarajan. The gas price will be revised on a quarterly basis.

The decision was positively welcomed by the oil firms like ONGC, Oil India and Reliance Industries. With the price hike, the ONGC’s EPS is likely to rise by 4-7 per cent for every $1/mmbtu increase in gas price, and RIL is expected to increase by 2-5 per cent in FY2015.