On Friday, the government announced that the natural gas price for the remaining days of April would be $7.92 per unit based on the newly approved pricing formula. However, the consumer rates for natural gas have been capped at $6.5 per unit.
According to an order of the Oil Ministry’s Petroleum Planning and Analysis Cell, the price of natural gas for April 8 to April 30 period comes to $7.92 per million British thermal unit going by the new indexation of pricing it at 10% of imported cost of crude oil.
However, the Union Cabinet had while changing the pricing formula capped the rates at $6.5 per mmBtu for two years ending March 31, 2025.
“For the gas produced by ONGC/OIL from their nomination fields, the price shall be subject to ceiling of $6.5 per mmBtu,” the order said.
The capped rates which are about a quarter less than the current prices, will lead to CNG and piped cooking gas prices being cut by up to 10%.
Following the decision, the CNG price in Delhi is likely to be cut from Rs 79.56 per kg to Rs 73.59 and that of PNG from Rs 53.59 per thousand cubic meters to Rs 47.59. In Mumbai, CNG may cost Rs 79 per kg instead of Rs 87 and PNG may cost Rs 49 per scm instead of Rs 54.
The government on Thursday accepted several key recommendations made by the Kirit Parikh Committee with respect to the pricing of natural gas produced from APM fields (that are legacy fields and largely held by PSUs like ONGC).
Under the new pricing mechanism, the pricing of gas will be linked to 10% of India’s average monthly crude import basket. There would also be a floor price of $4 per mmBtu and a ceiling price of $6.5 per mmBtu.
This formula replaces the old one where the rates were fixed using four international gas benchmarks. The price of gas according to this formula was $8.57 per mmBtu for six months ended March 31. For April 1 to April 7, the price of APM gas would be “$9.16 per mmBtu on a Gross Calorific Value (GCV) basis,” the PPAC order said.
