cng png rate cut, why CNG-PNG prices fell so much, understand the whole math
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Question: Why CNG PNG prices reduced?
answer: Domestic gas prices are now linked to imported crude instead of international hub gas. Now the price of domestic gas will be 10 percent of the price of Indian crude basket. Now the prices of CNG and PNG will be fixed every month, whereas earlier it was fixed twice a year i.e. every six months.
Question:What changes have the government made in the policy?
answer: Till now the prices of domestic gas were fixed on the basis of guidelines issued in October 2014. Under this, the prices in the domestic market were fixed on the basis of the prices in the international market. Now the government has changed this guideline. In October 2022, the government formed a committee under the chairmanship of Kirit Parikh to fix the prices of domestic gas. Changes have been made on its suggestion.
Question: What difference will these changes make? Will the prices decrease or may increase in the coming days as well?
answer: Both the floor price and ceiling price of domestic gas will be fixed. At this time the floor price has been fixed at $4 and the ceiling price at $6.5. Floor price i.e. minimum price and ceiling price i.e. maximum price. The ceiling price has been fixed for two years now. This cap will be increased after two years.
Question: What difference would it make if the prices were fixed every month?
answer: Earlier the domestic gas prices were fixed every 6 months. In such a situation, if the price of gas increased in the international market in between, then the gas companies would have suffered losses and if it had decreased, then the common people would have suffered losses. But now with the new changes both will be benefitted. Because prices will be fixed on Indian crude basket instead of international hub.
Question: Why imported crude instead of international gas hub?
answer: Till now the prices of domestic gas were decided by the four major gas trading hubs of the world. The average of the past one year price of these four gas trading hubs was taken and then it was applied at the interval of three months. The prices used to fluctuate rapidly in the international market and this had an impact on the gas prices. But now the price of domestic gas will be fixed on the basis of the price of gas imported by India from abroad.
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