Natural gas (CNG or compressed natural gas) which is majorly used by the consumers to run their vehicles and cooking gas (PNG, or piped natural gas) get ready to pay more right from next month.

It is because benchmark price for natural gas that is created from domestic fields is estimated to hit a two-year high. During the six-monthly revision which is due on 1st April.

 Also, the price which is paid to natural gas produced through domestic fields is supposed to be raised to USD 3.06 per million British thermal unit from April 1. It is now USD 2.89.

The USD 3.06 per mmBtu price will be for over six months. It starts from April 1. It will be the highest rate which is set since April-September 2016. When the same price was paid to domestic producers.

How it is set

The prices of natural gas have been set in every six months. It is based on average rates in various gas-surplus nations. This majorly includes nations such as US, Russia, and Canada.

India imports half of its gas which costs more than double the domestic rate.

It will definitely lead to higher CNG price and a high cost of electricity and urea production.

According to the fresh gas pricing formula permitted by the NDA-government in October 2014. The gas prices are going to be revised in every six months.

A hike will enhance earnings of ONGC

The increase in price wills surely enhancement earnings of petrochemical producers. The two among them is Oil and Natural Gas Corp and Reliance Industries. But this will also increase the CNG price. This uses natural gas as the input. Furthermore, it gives rise to increase the cost of urea and power production.

The upsurge in natural gas prices leads to high cost of raw material for compressed natural gas (CNG) and the one which is piped to households (PNG).

Also, It leads to higher cost of feedstock. The feedstock which is used for manufacturing of petrochemical and fertilizers and power production.

It is to be noticed that rise in gas price results in over Rs 4,000 crore more revenue for the PSU like ONGCnually.

ONGC is one of the Indias largest producers of Gas. It accounts for over 70% of the 90 million standard cubic meters. it means  70% of the per day recent output.

As per the new gas pricing formula approved by the NDA-government in October 2014, gas prices are to be revised every six months.

Though this hike is prices will improve the business of these but what about the common man. They have to pay more for things which are the most important part of their living. When will the government make such policies which are fruitful for the public as well?

Key points-

  • Government sources said the benchmark price is likely to rise by $3.06 per unit (or mBtu) from present $2.89.
  • This is going to be the maximum gas price since $3.82 for the six months ended March 2016.
  • The revision will enhance the earning ONGC and other petrochemical producers.


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