The government may lower the price of natural gas produced in India from USD 4.24 per mmBtu to USD 3.15, as it resets the benchmark used to calculate the price, sources have told CNBC-TV18.
This would come as a blow for upstream companies such as state-run ONGC, which is said to have requested the government to impose a USD 4.2 floor to the price.
In 2014, the government had introduced a formula that is used to calculate the price of gas produced in India. This was arrived at using a weighted average of prices prevailing at four global hubs: US, Canada, UK and Russia.
Up for a reset every six months (the new price will come into effect on April 1), the price of gas has been falling over the past year in line with the slump in international prices.
Market analyst SP Tulsian said that including taxes, the gas price should work out to about USD 6 for consumers, pointing out that they would still be cheaper than the average USD 7.2 per unit import price.
In the Union Budget this year, the Finance Minister had announced a revised formula for pricing gas produced from deepwater, difficult-to-explore areas.
But despite this, analysts are concerned that given low prices -- for both standard as well as deepwater gas -- production may take a hit.
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