CNG-PNG prices set to reduce as government approves new formula
The Central Government has approved a new formula for fixing the price of domestic natural gas. Along with this, the maximum limit of the prices of CNG and LPG supplied through pipes has also been fixed. Due to this, the prices of CNG and PNG will be reduced by as much as 10 percent. The cabinet meeting chaired by Prime Minister Narendra Modi approved the recommendations of the Kirit Parikh Committee on Natural Gas.
Information and Broadcasting Minister Anurag Thakur said that Administered Pricing Mechanism (APM) rate produced from conventional sector will now be linked to crude oil prices like US-Russia. Earlier the price was fixed on the basis of gas prices. Now the price of APM gas will be 10 per cent of the price of crude oil in the Indian basket. However, this price will not exceed $6.5 per million British thermal units (MMBtu). The base price has been kept at $4 per mmBtu. The current gas price is $8.57.
Prices will be fixed every month
In the new formula, the ceiling will remain fixed for two years. Then there will be an annual increase of $0.25 per mmBtu. CNG-PNG prices will now be fixed every month. Currently the rates are fixed every six months.
Incentive will be given in the form of 20 percent premium
To encourage gas production, it is proposed that 20 per cent premium will be given on additional production. If existing producers increase gas production, they will be given incentive in the form of 20 per cent premium in addition to the declared price. This will encourage producers to increase production using new technology.
Recommendation to bring under GST
The Parikh Committee has also recommended bringing gas under the ambit of GST. In this, it has been recommended to impose a general tax on gas, which can range from three percent to 24 percent. This will help in promoting the gas market.
Prices to be reduced by Rs 6 in Delhi and Rs 8 in Meerut
With this decision, the prices of CNG and PNG in Delhi could be reduced by up to Rs.6. Currently, CNG in Delhi is Rs 79.56 per kg and PNG is Rs 53.59 per thousand cubic metres. At the same time, CNG may be cheaper by Rs 8 and PNG by Rs 6.50 in Meerut.
