In the first ever reduction in domestic natural gas prices, rates will be slashed by 9 % to $4.56 per unit from April 1 to reflect the softening in international prices, potentially benefiting users in the power and fertiliser sectors.
The domestic gas price was raised from $4.2 per mmBtu to $5.61 per mmBtu effective November 1, 2014.
“The price of gas from April 1 will be $4.56 per mmBtu,” a top source in the Oil Ministry said.
“The government does not fix or notify a rate. A formula was notified last year, based on which the price applicable from April 1 would be $4.56 per mmBtu,” said the source.
The Oil Ministry is likely to announce the price for next six months “within next couple of days”, the source added.
This will be the first reduction in price of natural gas ever in India. While it will impact the revenue producers like Oil and Natural Gas Corp and Reliance Industries, it is expected to be a bonanza for users in the power and fertilizer sector.
When contacted,Oil Minister Dharmendra Pradhan refused to indicate the likely price but said, “if we are getting a cheaper price, its good for the economy.”
“We have to take a long term view and I think these prices will certainly not be deterrent and we will continue to invest billions of dollars in gas development,” said ONGC Chairman and Managing Director Dinesh K Sarraf.
The current price of $5.61 per mmBtu is already among the lowest in the Asia Pacific Region. China pays explorers $11.9 per mmBtu rate for new projects while Indonesia and the Philippines price the fuel at $11 and $10.5 respectively.
The only nations with rates lower than India are Vietnam ($5.2) and Malaysia ($5.00).
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)