State-run oil major, ONGC has said that the pricing mechanism recommended by the Rangarajan Committee are well balanced but also said that some of the aspects are too complex and needs to be simplified for implementation.

RS Sharma, former chairman and managing director, ONGC said that the mechanisms must be simplified for the industry. Under the recommendations, the base price of domestic natural gas will be increased to USD 8.8 a million British thermal unit (mBtu) from the current USD 4.2 mBtu. Mechanisms similar to that one recommended by Rangarajan is already in use in the US, Europe and Japan.

Finance minister P. Chidambaram said that the government is planning to adopt the new revenue-sharing model instead of a profit-sharing model for calculation the share of profit that is to be paid to the government by the operators. The government is considering the new model following the recommendations of the Rangarajan committee on formulating new production-sharing contracts between operators and the government.

The committee recommended that the government should look to move away from its cost recovery model to a new revenue sharing model. While presenting the Union budget for 2013-14 on Thursday, Chidambaram said that government will soon release the natural gas pricing policy and also take steps to address the bottlenecks in the oil and gas blocks that have been awarded by the government.