The government on Monday set the price of domestic natural gas in May at $8.27 Metric Million British Thermal Unit, raising it from $7.92 per MMBtu.
The announcement will not impact domestic, commercial, and industrial consumers of natural gas as the final rates for consumers is capped at $6.5 per mmBtu. There will be no change in the retail price of piped natural gas (PNG) for households and compressed natural gas (CNG) used as an automobile fuel.
The latest prices are based on a new formula of gas prices being pegged 10 per cent of the international price of the Indian crude basket.
In early-April, the government amended the administered price mechanism domestic pricing model of natural gas in line with the recommendations of the Kirit Parikh committee on gas pricing. One key government decision was to cap the rates for final consumers at $6.5 per MMBtu.
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It also approved a floor price of $4 per MMBtu for the next two years, to cover the cost of gas production by state-run firms ONGC Ltd and OIL Ltd. The ceiling price will be set at $6.5 per MMBtu. Afterwards, both the floor price and ceiling price will be increased yearly by about $0.5 per MMBtu.
About 83.3 per cent of India's natural gas is produced by ONGC Ltd and OIL Ltd, while the remaining 16.7 per cent is by private companies and joint venture entities.
The rate for gas extracted from newer, such as one operated by Reliance Industries and its partner BP in the KG Basin, have been cut marginally to $12.12 per mmBtu. This would remain the same unless mentioned otherwise, sources said.
Commercial LPG prices cut
In an unrelated move, the price of 19-kg commercial LPG cylinders has been reduced by Rs 171.50 per unit by state run-oil marketing companies with immediate effect.
From Monday, commercial LPG cylinders will now retail at Rs 1856.50 in Delhi. This is the second straight cut in prices over a month after OMCs had reduced prices by Rs 91.50 per unit on April 1.
However, the prices still remain higher than they were in February. OMCs had hiked prices by Rs 350.50 per unit on March 1.
No changes have been made in the prices of domestic LPG cylinders, which last saw prices rise by Rs 50 per unit on March 1.
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