INDIA: Union Minister Anurag Thakur announced a new pricing mechanism that will lead to a fall in the cost of CNG (Compressed Natural Gas) and PNG (Piped Natural Gas). The revised domestic pricing is introduced to fix the price of natural gas, especially domestically-produced natural gas, which is run by state explorers.
Thus, Natural gas produced from legacy old fields, known as APM gas, will be linked to crude oil prices instead of gas prices in surplus nations such as the US, Canada and Russia.
CNG, PNG to experience a price drop
Oil Secretary Pankaj Jain issued a significant update, claiming that the measure will reduce the price of CNG by 6–9% and PNG by 10%.
The price of such natural gas “shall be 10% of the monthly average of Indian Crude Basket and shall be declared on a monthly basis,” the Government of India stated in a statement.
Further, the information and broadcasting minister revealed that the deduction is made on the special occasion of Bharatiya Janata Party’s (BJP) foundation day, which aims to provide relief to millions of consumers, paying more attention to those using PNG and CNG across the country.
He said, “On the day of the foundation, the people received a gift from the honourable Prime Minister Narendra Modi. It is a nice day and a good decision because domestic (consumers), industrial (units), and farmers would all gain from it. The tentative impact of price reduction in APM (administered price mechanism) gas.”
The establishment of a balance between consumers and producers will be aided by this new adjustment.
As per reports, the decision to switch is based on advice from a group of experts led by economist Kirit Parikh. Subsequently, on November 30, 2022, the team turned in its report, suggesting a base price of $4 per unit and a ceiling price of $6.5 for natural gas generated from the old APM fields run by ONGC and OIL.
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