The government on March 31 announced a hike in the domestic natural gas prices to $6.10 per MMBtu, more than double the existing prices as energy prices surged globally. The new price will be applicable for six months beginning April 1.
Currently, the price of domestic natural gas stands at $2.9 per MMBtu. The new price for the half-year period is the highest so far since 2014 when the government moved to a new pricing policy.
"In accordance with Para 8 of the 'New Domestic Natural Gas Pricing Guidelines, 2014' issued vide Ministry of Petroleum and Natural Gas, Govt of India, F.No. O-22-13/27/2012-ONG-D-V dated 25-10-1014 the price of domestic natural gas for the period 1st April 2022 to 30th September 2022 is US$6.10/MMBtu on the Gross Caloric Value (GCV) basis," the government said in an official release.
The central government’s Petroleum Planning and Analysis Cell also notified an increase in the natural gas prices from deep fields to $9.92 per MMBtu from April-September from $6.13 per mmBtu.
“The domestic gas price has more than doubled from $2.9/mmbtu (GCV basis) for the period H2 FY2022 to $6.1/mmbtu for the period H1 FY2023. The domestic gas price increase was driven by the significant run-up in the prices of gas at global gas hubs. The increase in gas prices provides relief to Indian upstream producers as at earlier prices, gas production was a loss-making proposition for most fields for the Indian upstream producers,” said Prashant Vasisht, Vice President and Co-Head, Corporate Ratings, ICRA Limited.
The new hike in natural gas prices will boost the earnings of producers Oil and Natural Gas Corp Ltd, Oil India Ltd and Reliance Industries. However, it will raise the prices of gas sold to households, the power sector, industries and fertiliser companies, which may lead to an addition in overall inflation.
The development comes at a time when petrol and diesel prices were hiked for the ninth time on Thursday in the last 10 days by 80 paise a litre. This fresh round of hike takes the overall increase to Rs 6.40 per litre on petrol and diesel.
In a report issued on March 29, rating agency Crisil said that the domestic demand for natural gas is seen rising 12-14% next fiscal, despite prices remaining high for the past several months because of economic recovery and lower-than-usual inventories in key European consumption centres.
(1 MMBtu = 28.263682 m3 of natural gas at defined temperature and pressure)
Disclosure: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
