According to the data released by the Petroleum Planning and Analysis Cell (PPAC), the Ministry of Petroleum and Natural Gas (MoPNG) increased the Administered Price Mechanism (APM) domestic natural gas price for May 2023 to more than 4% MoM (month-over-month) to US$8.27 per mBtu (million British Thermal Units) on Gross Calorific Value (GCV) basis from US$7.92 per mBtu in April 2023.
- Objective: To ensure a stable pricing regime for domestic gas consumers and provide adequate protection to producers from adverse market fluctuation with incentives for enhancing production.
Backdrop:
i.In April 2023, the Cabinet Committee on Economic Affairs (CCEA) approved and revised the domestic natural gas pricing guidelines based on the recommendation set by the committee led by Kirit Parikh.
ii.Under the new pricing formula, price of natural gas shall be 10% of the monthly average of Indian Crude Basket and would be revised monthly basis, from the 26th of the previous month to the 25th of the current month.
iii.The gas produced in the nomination fields of Oil and Natural Gas Corporation (ONGC)/Oil India Limited(OIL) would be allowed a premium of 20% over the Administered Price Mechanism (APM) price.
Key Points:
As per the statement of PPAC, the price of gas from the nomination fields of both ONGC and OIL will be subject to a ceiling of US$6.50 per mBtu.
- This means that the price of piped natural gas (PNG) and compressed natural gas (CNG) may remain unchanged as the two ONGC and OIL use the gas from their nomination field to supply to them.
- The nominations fields are the assets that the government awarded to ONGC and OIL prior to 1999.
April 2023 Natural Gas Pricing:
i.In April the prices were revised for two time periods i.e from April 1 to April 7 and another from April 8 to April 30.
ii.For April 1 to 7, 2023, the price of natural gas on a Gross Calorific Value (GCV) basis was about US$9.16 per mBtu. Further MoPNG revised the price of natural gas under the APM at US$7.92 per mBtu for April 2023 (i.e.April 8 to April 30).
Commercial LPG: The oil marketing companies (OMCs) revised the price of commercial LPG (Liquefied petroleum gas ) on May 1, 2023. The rates have been decreased by Rs 171.5 per 19kg in line with a reduction in the international prices of natural gas. Thus a 19-kg commercial LPG cylinder now costs Rs 1,856.5 in Delhi.
Note – The Union government has targeted to increase the share of natural gas in India’s primary energy mix from 6.5% to 15% by 2030.
About Ministry of Petroleum and Natural Gas (MoPNG):
Union Minister – Hardeep Singh Puri (Rajya Sabha Uttar Pradesh)
Minister of State(MoS) – Rameswar Teli (Constituency – Dibrugarh, Assam)
