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Sunday, October 24, 2021

Natural gas price hiked by 62%

The new prices will be effective for six months starting October 1.

By: ENS Economic Bureau | New Delhi |
October 1, 2021 3:01:23 am
Power, fertiliser sectors could see hit; city gas units may pass on raise.

The Union government has raised the price of domestically produced gas by 62 per cent to $2.90 per million British thermal units (mmBtu) as lower production amid higher demand increased North American and European gas prices. The ceiling price for gas to be produced from difficult fields, which have higher pricing and marketing freedom, has been raised by 69 per cent to $6.13/mBtu.

The new prices will be effective for six months starting October 1. The move could have adverse implications for use industries including power and fertilisers, could spike inflation and strain the country’s current account. It may also impact farmers if the government doesn’t hike subsidy on fertilisers to offset the rise in prices of imported urea and DAP. City gas units may pass on the price hike to consumers.

The domestic gas price is linked to the weighted average price of four global benchmarks. Spot US LNG prices have risen from around $2.4/mbtu in April to $4.2/mbtu in August. The Centre had slashed domestic gas price by a sharp 25.1 per cent to the all-time low rate of $1.79/mbtu in September, 2020, and had kept the rate unchanged in the last price revision in April. —FE

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