Zee Media Bureau
New Delhi: Natural gas prices have been slashed by 8 percent to USD 4.66 per unit for the first half of next fiscal year from April 1 on gross heat value basis.
It will cost about USD 5.18/mmbtu on a net heat value basis compared with USD 5.61/mBtu now.
The government had in October last year fixed natural gas price at USD 5.05 per million British thermal unit based on weighted average of international hub rates. This was on gross clarofic value (GCV) basis.
"The price of gas on GCV basis from April 1 will be USD 4.66 per mmBtu," the government said in a statement on Tuesday.
This is the first reduction in price of natural gas ever in India. While it will impact the revenue producers like Oil and Natural Gas Corp and Reliance Industries, it will be a bonanza for users in the power and fertilizer sector.
As per mechanism approved in October 2014, price of domestically produced natural gas were to be revised every six month using weighted average price at Henry Hub of US, National Balancing Point of UK, rates in Alberta (Canada) and Russia with a lag of one quarter.
There was a drop in prices at international gas hubs in the second half - US Henry Hub dropped from USD 6 per mmBtu in February to USD 3.78 per mmBtu in October, and from USD 10.72 per mmBtu on NBP in January to USD 6.40.
The government had on October 17, 2014 approved a new formula that priced all domestic gas at weighted average of rates prevalent in gas-surplus economies of US/Mexico, Canada and Russia. This will be the first reduction in natural gas in India.
Domestic gas price was raised from USD 4.2 per mmBtu to USD 5.61 per mmBtu effective November 1.
With PTI Inputs
