CNG, PNG To Get Costlier As Govt Increases Domestic Gas Price By 6%

| March 30 , 2018 , 14:10 IST

The government on Thursday increased the prices of locally produced natural gas by 6 percent to $3.06 per million metric British thermal units (mmBtu) for the April-September period following the rise in international rates.

This move is likely to benefit upstream companies like ONGC, Oil India and Reliance Industries but will also lead to a rise in the prices of CNG and piped cooking gas, which uses natural gas as an input.

CARE rating report stated that "The increase in gas price will encourage the companies to take up more exploration activities as the realisations for the natural gas segment will improve. This will aid in the country’s aim to achieve reduction of oil and gas imports by 10 percent till 2022 as domestic natural gas production will be augmented."

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The report further cited, “From the consumers’ perspective, the increase in domestic gas prices is negative. The upward revision in the domestic gas price would increase the cost of domestic gas-based power generation by about 3%.”

Meanwhile, the price for gas from difficult fields has gone up by 7.6 percent to $6.78/mmBtu.

Price of locally-produced natural gas is reset every six months based on a government-set formula and is calculated on a gross caloric value basis.

This is the second hike in last one year. Earlier, the government had increased price of locally-produced natural gas to $2.89/mmBtu from $2.48.

The government in 2016 allowed pricing freedom to producers of gas from deep-sea and high-pressure high-temperature areas, with a ceiling linked to a mix of alternative fuels such as coal, LNG, naphtha and fuel oil.