The government of India on Thursday hiked the price of domestic natural gas by 62 percent that is used in households for cooking and is turned into compressed natural gas for use as fuel in automobiles.
As industry sources said, the increase in gas prices is likely to result in a 10-11 percent rise in compressed natural gas and piped cooking gas rates in cities such as Delhi and Mumbai. It will also lead to a rise in the cost of power generation, but consumers may not feel any major crisis as the share of power generated from gas is very low.
Gas prices were last raised in April 2019 and have since only fallen due to a drop in global benchmark rates but it does not reflect the current price of liquefied natural gas (LNG), witnessed during the last couple of weeks.
From October 1, 2021, the rates paid for gas produced from fields given to state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) will be $2.90 per Metric Million British Thermal unit for the six months as stated by the Petroleum Ministry’s Petroleum Planning and Analysis Cell (PPAC). At the same time, the price for oil produced from difficult fields such as the deep sea, which is based on a different formula, was increased to $6.13 from the current $3.62 per Metric Million British Thermal Unit.
Natural gas price is set every six months – on April 1 and October 1 – each year based on rates prevalent in nations such as the US, Canada, and Russia in one year fails to keep up with one quarter.
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