Modi government's big decision: Approval of new formula, CNG-PNG will be cheaper, price will decrease by 10%

The central government has approved a new formula for fixing the price of domestic natural gas. Many important major decisions were taken during the cabinet meeting chaired by Prime Minister Narendra Modi. In the meeting of the Union Cabinet, the amendment in the guidelines of 2014 has been approved under the new formula for fixing the price of natural gas. Due to this, the prices of CNG and PNG will be reduced by 10 percent. With this decision, the consumer will get rid of the losses due to the huge increase in international gas prices.

Information and Broadcasting Minister Anurag Thakur informed that the cabinet has approved the revised domestic gas pricing guidelines. The cabinet has been asked to take steps to ensure stable pricing in governance and provide adequate protection to producers from adverse market fluctuations. Anurag said that natural gas (APM) produced from the conventional sector will now be linked to crude oil prices like USA-Russia. Earlier the price was fixed on the basis of gas prices. Now the price of APM gas will be 10 percent of the price of crude oil in the Indian basket.

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. 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.

Petroleum Ministry Secretary Pankaj Jain said that due to the fixing of gas prices under the new formula, fertilizers and the power sector will also get cheaper gas. Along with this, the fertilizer subsidy will also be reduced. According to Secretary Pankaj Jain, the new formula approved by the cabinet will be broadly applicable to the gas of ONGC and Oil India. There has been no change in the pricing formula for deep water and ultra-deep water, high pressure – high-temperature areas.

With this decision of the central government, CNG and PNG can be cheaper by Rs 6 in the capital Delhi. 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 can be cheaper by Rs 8 and PNG by Rs 6.50 in Meerut.