ONGC is down 3.6% after the government decided to defer the decision on natural gas pricing further to November 30.
Law Minister Ravi Shankar Prasad announced on Wednesday evening that the cabinet had decided to defer the deciison on gas pricing, and a concrete decision could be expected by November 30.
The NDA government, after coming to power, had put off implementation of the previous UPA-regime approved Rangarajan formula, which would have at least doubled rates to USD 8.4 per million British thermal unit, till September 30 for holding wider consultations. But the decision, the Narendra Modi government had assured, would be taken by September 30.
One cannot be sure, but the government could be rethinking its policies not just on gas pricing buy on natural resource allocations, now that Supreme court has declared 214 coal block allocations illegal.
Today, Narendra Modi launched the "Make In India" campaign where he promised to make India a better country to do business in so that no businessman leaves the country. If that is the case, a decision as crucial as this should have been taken on a priority basis. The government came to power in May, and not postponing the decision twice would have been a better message to give out.
ONGC is an exploration player in natural gas, quite like Reliance Industries, and the pricing of gas decides their profit sharing and their viability.
As a result of the delay, Bank of America Merrill Lynch (BoAML) cut earnings estimates for ONGC and Oil India by 2%. Though the research firm expects the hike but assumes the price at $6.5 per mmbtu. It holds its buy on the stocks, but has cut the estimates which ahs also negatively impacted the share price. It says the Supreme Court is hearing two public interest litigation cases on the gas pricing, and the government could give out its decision before the next hearing on November 15.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}