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Cabinet to consider price caps on gas to stave off rates rising to USD 10.7 per mm
The Union Cabinet is likely to soon consider imposing caps or a ceiling on price for majority of natural gas produced in the country to keep input costs for users ranging from CNG to fertilizer companies in check, sources said. The government bi-annually fixes prices of locally produced natural gas — which is converted into CNG for use in automobiles, piped to household kitchens for cooking and used to generate electricity and make fertilisers.
Two different formulas govern rates paid for gas produced from legacy or old fields of national oil companies like Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL), and that for newer fields lying in difficult to tap areas such as deepsea.
The global spurt in energy prices post Russia’s invasion of Ukraine have led to rates of locally produced gas climbing to record levels – USD 8.57 per million British thermal unit for gas from legacy or old fields and USD 12.46 per mmBtu for gas from difficult fields.
April 1. Going by the current formula, prices of gas from legacy fields are slated to climb to USD 10.7 per mmBtu with minor changes in rates for gas from difficult fields, two sources with knowledge of the matter said.
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