Government revises domestic gas pricing guidelines; CNG, PNG to cost 10 percent less

Day after revising the domestic gas pricing guidelines, the Union Cabinet on Thursday imposed a cap or ceiling price which can help to reduce prices of CNG and piped cooking gas prices (PNG) by up to 10%. The move can bring some relief for consumers as the rates of both CNG and PNG jumped 80% in the previous few months after a sudden spike in international markets.

Earlier, the prices of natural gas produced from legacy or old fields, also known as APM gas was priced based on the benchmark rates of gas in surplus nations like the US, Canada, and Russia.Now, the Cabinet has decided to index the APM prices to the price of imported crude oil. APM will be priced at 10% of the price of a basket of crude oil that India imports. The rate is, however, capped at $6.5 per million British thermal units, with a floor price of $4 per mmBtu.

The new pricing method will be enforced from Saturday (8 April) and following the decision the prices of CNG in Delhi are expected to reduce from ₹79.56 per kg to ₹73.59, while in Mumbai the CNG is expected to cost ₹79 per kg instead of ₹87. The prices of Piped Natural Gas (PNG) are also expected to reduce with the new indexation method and in Delhi, a cut from ₹53.59 per thousand cubic meters to ₹47.59 is expected while in Mumbai the consumers will have to pay ₹49 per scm instead of ₹54, after the enforcement of new pricing regime.