Natural Gas Price For April At $7.92, Rate For Consumers Capped At $6.5: Govt

According to the PPAC, the price of natural gas from April 8 to April 30 will be $7.92 per million British thermal units going by the new indexation

On Thursday, the Cabinet approved a revision in the formula for the pricing of natural gas and imposed a cap or ceiling price to help cut CNG and piped cooking gas prices by up to 10 per cent. ( Image Source :Getty )

The central government on Friday announced the price of natural gas price as per the new pricing formula released on Thursday. According to the news agency PTI, the natural gas price has been fixed at $7.92 per MMBtu for the remainder of April. However, for consumers, the CNG prices have been capped at $6.5 per MMBtu. 

The report cited an order from Oil Ministry's Petroleum Planning and Analysis Cell (PPAC).  According to the PPAC, the price of natural gas from April 8 to April 30 will be $7.92 per million British thermal units going by the new indexation of pricing it at 10 per cent of the imported cost of crude oil.

However, the pricing formula caps the rates at $6.5 per million British thermal units for consumers. 

"For the gas produced by ONGC/OIL from their nomination fields, the price shall be subject to ceiling of USD 6.5 per mmBtu," the order said.

On Thursday, the Cabinet approved a revision in the formula for the pricing of natural gas and imposed a cap or ceiling price to help cut CNG and piped cooking gas prices by up to 10 per cent.

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. 

APM gas will be priced at 10 per cent of the price of the basket of crude oil that India imports. The rate arrived at however will be capped at $6.5 per million British thermal units. There will also be a floor or base price of $4 per mmBtu. The ceiling price is lower than the current rate of $8.57 per mmBtu and would translate into a reduction in prices of piped cooking gas as well as CNG sold to automobiles. 

Piped cooking gas prices will be cut by up to 10 per cent across cities while CNG will see a little lower reduction. 

It was reported that following the decision, the CNG price in Delhi will be cut from Rs 79.56 per kg to Rs 73.59 and PNG prices will be reduced from Rs 53.59 per thousand cubic meters to Rs 47.59. In Mumbai, CNG will cost Rs 79 per kg instead of Rs 87 and PNG will cost Rs 49 per scm instead of Rs 54.

The Indian basket of crude oil is currently priced at $85 per barrel and 10 per cent of that translates into a price of $8.5 but the cap would mean the APM gas produces, ONGC and Oil India Ltd would get only $6.5 per mmBtu.