The Union Cabinet on Thursday approved amendments to the natural gas pricing formula and imposed a cap or ceiling price to help bring down prices of compressed natural gas and piped cooking gas by up to 10%.
The government then announced a natural gas price of US$7.92 per unit for the rest of April as per the new pricing formula approved on Friday, but rates for consumers have been capped at US$6.5 per unit.
According to an order by the Petroleum Planning and Analysis Cell of the oil ministry, the price of natural gas for the period April 8 to April 30 comes to US$7.92 per million British thermal unit, based on pricing at 10% of the imported cost of the price. Going by the new index. crude oil.
Capped rates which are about a quarter less than the current prices, CNG and piped cooking gas prices will be cut by up to 10%.
PNG and CNG rates have increased by 80% in a year till August 2022. This follows a spurt in international energy prices.
This formula replaces the earlier formula where rates were decided using four international gas benchmarks. According to this formula, the gas price for the six months ended March 31 was $8.57 per mmBtu.
The prices will now be revised every month, henceforth, instead of a bi-annual revision.
The government will monitor the prices of CNG and PNG for domestic cooking to ensure that the reduction in the price of the input gas is passed on to the consumers.
CNG price in Delhi, Mumbai
After this decision, the price of CNG in Delhi will come down 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 will cost Rs 79 instead of Rs 87 and PNG will cost Rs 49 per kg instead of Rs 54.
Mahanagar Gas (MGL), a subsidiary of GAIL India, on Friday announced a steep reduction in the retail price of CNG by Rs 8 per kg and domestic PNG by Rs 5 per SCM in its license area.
The move comes after the Center revised the pricing methodology proposed by the Kirit Parikh committee.
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi, had approved the revised Domestic Natural Gas Pricing Guidelines for gas produced from ONGC/OIL’s nomination areas, New Exploration Licensing Policy (NELP) blocks and pre-NELP blocks , where production takes place. Sharing Contract (PSC) provides for approval of prices by the Govt.
The price of such natural gas will be 10% of the monthly average of the Indian crude basket and will be notified on a monthly basis.
For gas produced by ONGC and OIL from their nomination blocks, the Administered Price Mechanism (APM) price will be subject to a floor and ceiling. Gas produced from new wells or intervention wells in nomination areas of ONGC and OIL will be allowed a premium of 20% over the APM price.
APM Gas supplies most of the CNG and LPG.
The Ministry of Petroleum and Natural Gas said the new guidelines are aimed at ensuring a stable pricing regime for domestic gas consumers, while also providing adequate protection to producers from adverse market movements with incentives to increase production.
In addition, the government has set a target to increase the share of natural gas in the primary energy mix in India from the current 6.5% to 15% by 2030. The reforms will help increase natural gas consumption and contribute to the reduction of emissions and the achievement of net goals. Zero.
Along with the provision of a floor in gas prices as well as a 20% premium for new wells, this reform will encourage ONGC and OIL to make additional long-term investments in the upstream sector, leading to higher natural gas production and imports. There will be a decrease in Dependence on fossil fuels.
The revised pricing guidelines will also promote a lower carbon footprint through the development of a gas-based economy.
Currently, domestic gas prices are determined as per the new Domestic Gas Pricing Guidelines, 2014, which were approved by the government in 2014.
The 2014 pricing guidelines provided for the declaration of domestic gas prices for a period of 6 months at four gas trading hubs – Henry Hub, Albena, National Balancing Point (UK) and Russia for a period of 12 months. The prevailing quantities were on the basis of weighted prices. One quarter time interval.
The ministry said that the earlier guidelines based on 4 gas hubs had significant time lag and high volatility, hence the need for this rationalization and correction was felt.
The revised guidelines make crude oil linked prices, which is the practice now adopted in most industry contracts, more relevant to our consumption basket and deep liquidity in global trading markets on a near real time basis.
With the changes now approved, the Indian crude basket price data for the previous month will form the basis for APM gas pricing.
(With PTI inputs)
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