CNG, piped gas to cost more from 1 April with a 10% rise in natural gas price
29 March 2019
Retail prices of compressed natural gas (CNG) and piped cooking gas are expected to go up next month with the price of natural gas rising by 10 per cent to hit their highest level in three years from 1 April.
Beginning 1 April, the price of domestically produced natural gas will rise to $3.69 per million British thermal unit (mmBtu) for the April-September 2018-19 period against $3.36 in the October-March 2018-19 period, report quoting sources said.
The price of gas produced from difficult fields will rise to USD 9.32 per mmBtu for the six months beginning 1 April from $7.67 at present. A formal notification is expected to be issued shortly, but with elections round the corner, government is likely to consult the Election Commission before announcing any price revision.
This will be the fourth straight increase in gas prices. Prices will be at their highest level since the October 2015-March 2016 period when the rates of domestically produced natural gas were at $3.82 mmBtu.
Natural gas prices are set every six months - on April 1 and October 1 every year - based on average rates in gas-surplus nations such as the US, Russia and Canada.
The rate is calculated by taking a weighted average price at Henry Hub of the US, National Balancing Point of the UK, rates in Alberta (Canada) and Russia with a lag of one quarter.
While higher natural gas prices will burden the consumer, the increase in price will boost earnings of natural gas producers like Oil and Natural Gas Corp (ONGC) and Reliance Industries.
Every one dollar increase in gas price will bring in Rs4,000 crore additional revenue to ONGC on an annual basis.