NEW DELHI: The Centre on Thursday raised the March price of
natural gas
produced from domestic fields under legacy financial and regulatory regimes by about 4% to $8.17 per unit (million metric British thermal units) but
consumers
will not be impacted due a $6.5
price cap
in the current pricing mechanism.
The government had in April 2023 linked domestic gas pricing to the ‘Indian basket’ — or the mix of crude bought by the Indian refiners after scrapping the earlier formula based on benchmark prices in gas-surplus markets such as the US, Canada, Europe and Russia.
The revised formula, based on recommendations by a panel led by eminent economist Kirti Parikh, set
domestic gas price
at 10% of the monthly average of the Indian Basket in the previous month, with a floor of $4 and a cap of $6.5 per unit.
The floor ensured minimum remunerative price for producers in a depressed market, while the cap protected consumers such as CNG and PNG consumers from the full impact of price spikes.
The Indian Basket represents a derived basket comprising of ‘sour’ grade (Oman & Dubai average) and ‘sweet’ grade (dated Brent) of crude processed in Indian refineries in the ratio of nearly 76: 24 ratio. India meets 85% of its oil needs and 40-50% of gas requirement through imports.
English (US) ·