The Union Cabinet has approved the change in the formula for determining the prices of natural gas. On top of this, the government has imposed a cap or ceiling price. This step will help in reducing the prices of CNG and piped cooking gas by up to 10 per cent. Due to the sudden boom in the international markets, the rates of both CNG and PNG have increased by 80 per cent.
How will the price revising formula work?
Union Information and Broadcasting Minister Anurag Thakur told reporters after a cabinet meeting on Thursday that APM gas, which is natural gas produced from legacy or old fields, will now be sold to four surplus countries like the US, Canada and Russia. Will be indexed to the price of imported crude oil instead of benchmarking it to crude oil prices.
The price of this APM gas will be 10 per cent of the price of the crude oil basket imported by India. In addition to the floor or base price of USD 4 per mmBtu, there will be a price cap of USD 6.5 per million British Thermal Units at such an arrival rate.
Anurag Thakur said that the ceiling price is lower than the current rate of $8.57 per mmBtu and this will bring down the prices of piped cooking gas and CNG sold to automobiles.
He said that due to this, the prices of piped cooking gas will be reduced by 10 percent, while a slight reduction will be seen in CNG.
What will be the new rates?
CNG price in Delhi is expected to come down from Rs 79.56 per kg to Rs 73.59 and PNG price is expected to come down from Rs 53.59 per thousand cubic meters to Rs 47.59 per kg. In Mumbai, CNG will cost Rs 79 per kg instead of Rs 87 and PNG will cost Rs 49 per thousand cubic meters instead of Rs 54.
The Indian basket of crude currently costs US$85 a barrel and 10 per cent of that translates into a price of US$8.5, but the cap would mean that the products of APM Gas, ONGC and Oil India Ltd would cost only US$6.5. Per MMBTU will be available.
