New Delhi: The government has increased the price of natural gas by over two times from $2.90/mmBtu to $6.10/mmBtu for the period between April 1 and September 30. The hike in price comes on the back of a rise in global energy prices. According to a notification released by the Petroleum Planning and Analysis Cell (PPAC), gas from old fields like Oil & Natural Gas Corporation's (ONGC) Bassein field will now cost $6.10/mmBtu. The price hike will result in a hike in CNG and cooking gas rates.
The rise in natural gas prices comes in the backdrop of a hike of Rs 6.4 per litre in petrol and diesel prices in the last 10 days. LPG rates have also gone up by Rs 50 per cylinder. All of this is expected to further fuel inflation in an economy which is still struggling to recover from the slowdown induced by the pandemic.
"The rate applicable to newer and difficult fields such as ones of Reliance Industries Ltd in deepsea KG-D6 block, will get USD 9.92 per mmBtu for April-September as compared to current USD 6.13 per mmBtu," the PPAC notification said. The prices are the highest ever paid to Indian gas producers.
The price of natural gas is set by the government every six months on April 1 and October 1 in a financial year. The prices are based on the rates prevalent in gas surplus nations such as the US, Canada and Russia.
Prashant Vasisht, Vice President and Co-Head, Corporate Ratings, ICRA Ltd, said, "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."
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