Domestic natural gas to cost 10% less at $5.02/unit from 1 April

Natural gas produced in the country will cost 10 per cent less from 1 April after the government decided to revise gas price following a fall in its international prices.

Based on current international prices, the unit price of domestically-produced natural gas will be around $5.02 per million British thermal units (mmBtu) from 1 April against the current level of $5.62 per mmBtu at present.

The fall in natural gas prices will hit revenues of gas producers like state-run ONGC and private sector Reliance Industries Ltd (RIL).

The government fixes natural gas prices in India on the basis of average rates at key international hubs.

On a gross-calorific value basis, the price will be around $4.67 per mmBtu compared to $5.05 at present.

The BJP-led NDA government had, in October 2014, announced a new formula to fix the price of almost all domestically produced natural gas at $5.61 per mmBtu for the period up to 31 March. (See: Govt raises price of domestic natural gas to $5.61 per mmBtu )

That was 46 per cent above the then existing price of $4.2 per mmBtu for domestically-produced natural gas.

The government had, however, deregulated diesel prices, bringing down retail prices of the popular fuel by Rs3.37 per litre at that time.

Rates for the next six months will be decided based on the one-year average price at the Henry Hub of the US, the National Balancing Point of the UK, rates in Alberta (Canada), and Russia with a lag of one quarter.

So, the rate for April 1 to September 30 would be based on the average price at the international hubs during January to December 2014.

The oil ministry is expected to announce the new rates this week.