CNG-PNG Price Are About To Increase In Upcoming Cabinet Meeting Due To Changes In Global Gas Rate Hike

CNG-PNG Price: The Union Cabinet will soon consider capping the price of natural gas produced in the country. The purpose of this step is to reduce the cost of production from CNG to fertilizer companies. Sources gave this information.

The government fixes gas prices twice a year.

The government fixes the prices of locally produced natural gas twice a year – which is converted into CNG for vehicular use and piped gas (PNG) for cooking. Apart from this, gas is also used in electricity and fertilizer production. These rates are to be revised on April 1.

Cabinet to consider fixing price cap for natural gas produced in the country

There are two formulas for paying for domestically produced gas. Among these, one is the formula for payment of gas produced from old fields of national petroleum companies like Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) and the other is the formula for payment of gas produced from new fields of deep sea.

Rise in global energy prices

A jump in global energy prices following Russia’s invasion of Ukraine has pushed rates for locally produced gas to record highs. The rate is fixed at US$8.57 per million British thermal units (MMBtu) for gas from legacy or old fields and US$12.46 per MMBtu for gas from difficult fields.

Gas prices can reach $ 10.7 per mmbtu

According to the current formula, gas prices from old fields could rise to $10.7 per mmBtu, said two sources with knowledge of the matter. There will be a slight change in the price of difficult area gas. After the last revision in gas prices, the prices of CNG and PNG have gone up by up to 70 per cent. If the rates are revised from April 1, then it will increase further.

The committee was formed under the chairmanship of Kirit Parikh.

Sources said the government had last year constituted a committee under the chairmanship of Kirit Parikh on revision of gas prices to balance both local consumer and producer interests as well as further the objective of the country becoming a gas-based economy. . In its recommendations, the committee has asked the old fields to change the price of gas to 10 per cent of the current Brent crude oil price for a fixed period. Till now this was done on the basis of prices of gas surplus countries. The committee has suggested no change in the formula for difficult areas.

There can be a change under the limit of $ 6.50 per mmbtu

This, however, would be subject to a floor price of $4 per unit and a ceiling of $6.50 per mmBtu, sources said. The current Brent crude oil price is $75 per barrel. In such a situation, the price of gas should be $7.5 per mmBtu, but due to the limit, the cost of fuel will be only $6.5.

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