: Govt doubles natural gas price; CNG rates may go up #finance #StockMarketNEWS #Business Press Trust of India New Delhi The government on Thursday more than doubled the price of natural gas that

Posted in: #finance #StockMarketNEWS #Business

Govt doubles natural gas price; CNG rates may go up #finance #StockMarketNEWS #Business
Press Trust of India

New Delhi

The government on Thursday more than doubled the price of natural gas that is used to produce electricity, make fertilisers, turned into compressed natural gas (CNG) and piped to household kitchens for cooking, on the back of a spike in global energy prices.

The price of gas produced from old regulated fields, such as the nation’s largest gas field of Bassein of Oil and Natural Gas Corporation Limited (ONGC), will rise to a record high of US$ 6. 10 per million British thermal unit (mmBtu) from the current US$ 2. 90 per mmBtu, according to the oil ministry’s Petroleum Planning and Analysis Cell (PPAC).

The new price, which is likely to result in a hike in CNG and piped cooking gas rates, will be for six months beginning April 1. Petrol and diesel prices have been raised nine times in the last 10 days, totalling `6. 4 per litre while cooking gas LPG rates too have gone up by `50 per cylinder. The latest gas price hike will further fuel inflation.

The rate applicable to newer and difficult fields such as ones of Reliance Industries Ltd in deepsea KG-D6 block, will get US$ 9. 92 per mmBtu for April-September as compared to current US$ 6. 13 per mmBtu, the PPAC notification said.

These are the highest prices ever paid to Indian gas producers.

The government sets the price of gas every six months on April 1 and October 1 each year based on rates prevalent in gas surplus nations such as the United States, Canada and Russia.

The increase in gas price is likely to result in a 10-15 per cent rise in CNG and piped cooking gas rates in cities such as Delhi and Mumbai, industry sources said.

Prashant Vasisht, Vice President and Co-Head, Corporate Ratings, ICRA Ltd, said: “The domestic gas price increase was driven by the significant run up in the prices of gas at global gas hubs. The increase in gas prices provides relief to Indian upstream producers as at earlier prices, gas production was a loss-making proposition for most fields for the Indian upstream producers. �?

CNG and piped cooking gas supplies in cities come from the gas produced by ONGC.

The price hike will also lead to a rise in the cost of generating electricity but consumers may not feel any major pinch as the share of power produced from gas is very low.

Similarly, the cost of producing fertiliser will also go up but as the government subsidises the crop nutrient, an increase in rates is unlikely.

This is the second straight hike in prices and betters US$ 5. 05 paid to ONGC and Oil India Ltd for old fields between November 2014 and March 2015 and US$ 9. 32 to newer fields in April-September 2019.

The new rates reflect the spike in prices at the global benchmarks – U.