Govt to cut gas price for producers by 20% in October
The Dollar Business Bureau
The price of natural gas paid to the producers such as Oil and Natural Gas Corporation Ltd (ONGC) and Reliance Industries Ltd (RIL) is expected to decline 20 percent to $2.45 in the month of October.
This price drop will be the fourth in the last one and a half year, after the pricing formula cleared in October 2014 by the government. The given rate is based on the gross calorific value (GCV).
The price of gas produced from prevailing fields of RIL and ONGC is expected to decline to $2.45 per mmBtu (million British thermal units), effective from October 1, against the present rate of $3.06, according to a senior official.
Earlier, the price of natural gas was reduced on April 1 this year to $3.06 per mmBtu from $3.82 per mmBtu. On the basis of net-calorific value (NCV), the price of gas was on that date reduced to $3.4 per mmBtu against the previous $4.24.
On the basis of NCV, the new price of natural gas is expected to be $2.7 with effect from October 1.
According to the new pricing formula, the prices of gas are to be reviewed every six months and the next price revision is slated for October 1.
The cut in the prices of natural gas would help in lowering the cost of raw material for natural gas piped to households (PNG) and compressed natural gas (CNG), thus resulting in lowering the retail prices.
This cut will be the fourth following the implementation of the pricing formula for domestic gas that measures the price on a volume weighted median of rates in the gas surplus countries including the US, Russia and Canada, on the basis of 12-month trailing average price with an interval of 3 months.
Since the implementation of the pricing formula for gas in October 2014, the price of gas has fallen by around 39 percent.