The government on Friday announced a natural gas price of $7.92 per unit for the remainder of April according to the just approved new pricing formula, but rates for consumers 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 per cent 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 per cent.
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 per cent of India’s average monthly crude import basket. There would also be a floor price of USD 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 period prior to the Cabinet decision – the price of APM gas would be “$9.16 per mmBtu on a Gross Calorific Value (GCV) basis,” the PPAC order said.
“For the gas produced by ONGC and OIL from their nomination fields, the APM price shall be subject to a floor and a ceiling.
“The initial floor and ceiling prices shall be $4 per mmBtu and $6.5 per mmBtu respectively. The ceiling would be maintained for the next two years (FY 2023-24 and 2024-25) and then increased by $0.25 per mmBtu each year,” a separate Gazette notification indicating the decision of the Cabinet said.
The prices will now be revised every month, going forward, instead of bi-annual revision.
“The APM prices would be declared on a monthly basis by PPAC on the last day of the month,” the notification said.
The government will monitor prices of CNG and piped natural gas (PNG) for household kitchens to ensure that the reduction in input gas price is passed on to the consumers.
“PPAC has been mandated to prepare and maintain a portal for monitoring of CNG/PNG consumer prices on a dynamic basis. PPAC will develop a suitable mechanism for receiving regularly updated data from the CGD entities. The portal would be made dynamic to reflect the changing prices without delay,” the notification said.