Cabinet approves revised domestic gas pricing guidelines
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Source: The post is based on the articleCabinet approves revised domestic gas pricing guidelinespublished in PIB on 6th April 2023

What is the News?

The Cabinet Committee on Economic Affairs has approved a new mechanism to fix pricing for domestic natural gas in India.

What are the changes made in the prices of Natural Gas?

Earlier, the prices of natural gas produced from legacy or old fields also known as APM gas was priced based on the benchmark rates of gas in surplus nations like the US, Canada, and Russia. Now, the Government has decided to index the APM prices to the price of imported crude oil. 

The price of such natural gas shall be 10% of the monthly average of Indian Crude Basket and shall be notified on a monthly basis. 

The move will make PNG or cooking gas cheaper by 10% and lower the cost of CNG by 6-9%. The reduced prices shall also lower the fertilizer subsidy burden and help the domestic power sector.

What is the need for changes in the prices of Natural Gas?

In 2022, the government set up a committee headed by Kirit Parikh to examine gas prices and determine a pricing formula that takes into account the interests of both local consumers and producers. The committee recommended a price range for current production from legacy or old fields, which account for about two-thirds of the country’s total gas production.


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