The price of domestic natural gas, which was hiked in November after a gap of more than five years and a spell of political wrangling, will see a 7.6 per cent reduction to $5.18 per million British thermal units (mmBtu) effective April 1, as the relevant global benchmark prices remained subdued in the second half of 2014. The new price based on a net calorific value basis will be announced shortly and will be valid for the first half of 2015-16.
The price reduction, the first in history, is despite Indian prices already being among the lowest in the Asia-Pacific and amid the delays in announcing the premium cleared by the Cabinet for gas produced from post-November 2014 discoveries in difficult geographies. A lowering of the gas price, analysts said, would hit state-run ONGC , Reliance Industries and Oil India.
India’s current gas price of $5.61/mmBtu, up a third from the price of $4.2 that prevailed for close to six years, is far lower than $11.90 China pays for its gas producers; Indonesia and the Philippines price the fuel at $11 and $10.50, respectively.
The revised price from April 1 is arrived at by applying the Cabinet-approved formula on the select average global prices for the fuel between January and December 2014. The CCEA on October 18 last year approved the formula, after tweaking the Rangarajan formula approved by the UPA government in June 2013. The price is to be revised every six months. FE