Govt approves Kirit Parikh panel recommendations on natural gas pricing

Tags: Economy/Finance National News

The government on April 7 fixed natural gas price at $7.92 per MMBTU (million British thermal units) for the rest of April under the new pricing formula suggested by the Kirit Parekh Committee.

An overview of the news

• However, the final rates for consumers have been capped at $6.5 per MMBTU.

• The Petroleum Planning and Analysis Cell (PPAC) of the oil ministry said in the order that the price of natural gas for April 8 to April 30 would be $7.92 per million British thermal units.

• This price has been fixed on the basis of 10 per cent of the average cost of imported crude oil.

• The Union Cabinet, while changing the pricing formula, capped the rates for consumers at $6.5 per MMBTU. This limit will be applicable for two years till March 31, 2025.

• “The price for gas produced by ONGC/OIL from their old fields shall be subject to a ceiling of $6.5 per MMBTU,” the order said.

• The government has approved a floor price of $4 per MMBTU for the next two years to cover the cost of gas production for state-owned firms ONGC Ltd and OIL Ltd.

• The new rates will bring down the prices of CNG and compressed natural gas (CNG) transported through pipelines and used in various industries including auto fuel and petrochemicals and fertilizer sector, by up to 10 per cent.