A war of words has broken out between Oil and Natural Gas Corporation and Gail (India) Ltd over the pricing of natural gas.

While ONGC this week said it paid Rs 250 crore (Rs 2.50 billion) to the gas pool account to subsidise Gail, the state-run gas transmission firm on Thursday said: "There is no element of subsidy involved in the current gas pricing mechanism as set by the government in 1997."

 "The existing pricing mechanism of the government is based on the recommendations of the T L Shankar Committee.

This mechanism has very clearly determined the producer price to the gas producers to compensate them for the cost of production and a reasonable rate of return. Gas producers continue to get their entitled producer price," Gail said.