The Union Cabinet has approved a new formula for determining the price of natural gas that will make piped natural gas (PNG) cheaper by 10 per cent and lower the cost of compressed natural gas (CNG) by 6 per cent to 9 per cent.
The government will issue a notification on Friday to announce this change and the decision will come into force from Saturday.
Announcing the changes, Union I&B Minister Anurag Thakur at a Cabinet briefing said, natural gas produced from legacy or old fields, known as APM gas, will now be indexed to the price of imported crude oil instead of benchmarking it to gas prices in four surplus nations such as the US, Canada and Russia.
A PM gas will be priced at 10 per cent of the price of the Indian basket of crude oil imported by India. However, the rate will be limited to a maximum of USD 6.5 per million British thermal units, and there will also be a minimum or base price of USD 4 per mmBtu.
#Cabinet approves revised domestic gas pricing guidelines
price of natural gas to be 10% of the monthly average of Indian Crude Basket, to be notified monthly
Move to ensure stable pricing in regime and provide adequate protection to producers from adverse market fluctuation pic.twitter.com/NRONPAOzzK
— Rajesh Malhotra (@DG_PIB) April 6, 2023
The ceiling price is lower than the current rate of USD 8.57 per mmBtu and would translate into a reduction in prices of piped cooking gas as well as CNG sold to automobiles, Thakur said.
India is targeting to increase the share of natural gas in the primary energy mix from the current 6.5 per cent to 15 per cent by 2030. The reforms will help expand the consumption of natural gas and will contribute to the achievement of the target for emission reduction and net zero, the government said in the statement..
Oil Minister Hardeep Puri tweeted the move will protect the interest of consumers.
“In continuation to various initiatives taken under the leadership of Prime Minister Narendra Modi to protect the interest of consumers by reducing the impact of increase in international gas prices on gas prices in India, the Union Cabinet approves revised domestic gas pricing guidelines,” Mr Puri said.
