ONGC, Oil India gain on Rangarajan panel report

State-controlled Oil and Natural Gas Corporation (ONGC) rose as much as 2.5 percent intraday on Friday after sources said the government should accept Rangarajan Panel's recommendations on gas pricing.

CNBC-TV18 reported quoting sources that current gas pricing has been driving away investors and has been the reason behind falling output in India. "Sectors like power will benefit from remunerative gas price," sources added.

Rangarajan committee recommends price and production linked bidding and revenue sharing with the govt as against current practice based on cost recovery.

Committee recommends gas pricing based on average netback price of Indian LNG import at the wellhead of the exporting countries and weighted average price of US, UK and Japan markets.

Emkay Global Financial Services says if gas pricing proposal implemented it would be positive for Reliance Industries in the medium-term. "However, ONGC and Oil India too would get benefited in the long run." Rangrajan committee has submitted its report to PMO. The recommendations are mainly focused on two aspects 1) Existing Production Sharing Contracts (PSC) and its structure 2) Gas pricing formula.

At 10:29 hours IST, the stock rose 1.5 percent to Rs 283.95 on the Bombay Stock Exchange. The stock has been gained 12 percent in eight consecutive sessions.
 
Oil India rallied 3 percent to Rs 485.05 while Reliance Industries was marginally up.