CNG-PNG Price: CNG-PNG prices will increase again! Government can take a big decision on April 1
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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 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.
Boom in energy prices globally: 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. A jump in global energy prices following Russia’s invasion of Ukraine has pushed rates for locally produced gas to record highs.
Gas price is fixed twice: 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. These rates are to be revised on April 1. 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.
70 percent increase in CNG and PNG prices: 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. 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. .
The following suggestions were given by the Kirit Parikh committee: In its recommendations, the committee has asked the old fields to change the price of gas to 10 percent 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. 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. The committee has suggested no change in the formula for difficult areas.
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