Govt hikes prices of domestic natural gas by 62% to $2.90 per mmBtu

01 Oct 2021

After keeping the price of domestic natural gas unchanged at $1.79 per mmBtu for the April-September 2021 period, the government raised the price of domestically produced natural gas to $2.90 per million British thermal unit (mmBtu) from 1 October 2021 to 31 March 2022, from the existing $1.79, the Petroleum Planning and Analysis Cell (PPAC) stated in a notification on 30 September. 

In another notification, PPAC said the maximum sale price allowed to natural gas production from deepwater, ultra-deepwater, high pressure and high-temperature discoveries was increased from $3.62 per mmBtu to $ 6.13 per mmBtu.
The price of domestic gas now stands raised by 62 per cent from the previous revision. The price of natural gas produced from difficult fields has been increased by 84.6 per cent from its last revision in April this year.
In April, the price of natural gas produced from deepwater, ultra-deepwater, high pressure and high-temperature discoveries was cut from $4.06 per mmBtu to $3.62 per mmBtu.
The prices will be applicable on a gross calorific value basis.
Natural gas is the raw material that is converted into compressed natural gas (CNG) for use in automobiles as fuel or piped to household kitchens for cooking purposes.
Natural gas prices affect the earnings of state-run producers such as Oil and Natural Gas Corp Ltd and Oil India Ltd.
With the hike in gas prices, the cost of producing fertiliser will go up. However, as the government subsidises it, an increase in its rate is unlikely. Further, the cost of producing electricity may also go up but the end consumers are not expected to feel the pinch as the share of gas in producing electricity is very low.
ICICI Securities in its report earlier this month had said that CNG and piped cooking gas prices in cities such as Delhi and Mumbai may be hiked by 10-11 per cent from October as the government-dictated gas price is set to rise by about 76 per cent.