LPG, CNG, cooking gas prices likely to be lower soon as natural gas rates come down to the lowest they have been in more than a decade
LPG, CNG, gas prices: In what comes as a huge relief to customers amid the rising inflation in gas prices, it has now been reported that the prices of Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), and Piped Natural Gas (PNG) are likely to fall drastically.
Notably, the prices for natural gas are going to be drastically cut. Gas prices are fixed every 6 months, the first of which is done in April and then again in October. Natural gas prices, scheduled for October, are now set at $1.90-1.94 per MMBtu. This is the lowest rate of natural gas prices that have been set in more than a decade.
Natural Gas benchmark rates set to change
Notably, natural gas-exporting countries are going to change the benchmark rates. According to sources, the prices of natural gas are to be revised from October 1, 2020. The price of gas will be reduced to $1.94 per million British thermal units (MMBtu) in terms of changes in the benchmark rates of gas-exporting countries (Natural Gas Exporters).
If this happens, it will be the third consecutive cut in natural gas prices in a year. Earlier in April, natural gas prices were cut by about 26 cents. This had reduced the price of natural gas to $2.39 per MMBtu.
ONGC to suffer substantial loss
The cut in gas prices means that ONGC, the country's largest oil and natural gas producer, will be going through a substantial deficit. ONGC had incurred a loss of Rs 4,272 crore in gas trade in 2017-18. It is projected that the loss amount will increase to Rs 6,000 crore in the current fiscal year. ONGC is losing 6.5 crore cubic meters of gas per day. The central government had introduced the new gas price formula in November 2014. It is based on value centers of gas surplus countries such as the US, Canada, and Russia. The price of gas is currently $2.39 per unit, the lowest in more than a decade. The government raised the price of gas sold to power and fertiliser companies from $1.79 per unit to $4.20 per unit in May 2010.
New formula to reduce prices
ONGC and Oil India used to receive a price of $3.818 per unit for gas production. After adding a 10% royalty, the price came up to $4.20 for consumers. The Congress-led UPA government had approved a new price formula, which was scheduled to come into effect from 2014. This would have increased the price of gas. The BJP-led NDA government, therefore, cancelled it and introduced a new formula. The price of gas was $5.05 per unit at the time of the first revision. Then, in the half-yearly revision, gas prices came down.
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 "Natural Gas, Cooking Gas, Liquefied Petroleum Gas (LPG), compressed natural gas (CNG), piped natural gas (PNG), Oil and Natural")
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