New Delhi/ Mumbai: The petroleum ministry on Wednesday said it is still working out the new domestic natural gas price to be effective 1 April, rejecting as “mere speculation” the likely 10 per cent cut in the gas price, earlier quoted in a media report.
In all likelihood the new gas price will be announced in ten days.
The ministry, however, said it expects the new price to be lower than the existing rate of $5.6 per million british thermal unit (mmbtu) on Net Calorific Basis (NCV) owing to the slump in the global Liquefied Natural gas (LNG) prices in the past few months.
“The ten per cent cut in gas price is a mere speculation. Petroleum Planning and Analysis Cell (PPAC) is still processing data to calculate the new price,” a top ministry source told Business Standard. “We will announce the new price in ten days but the expectation is it will be lower than the existing price,” he added.
Any change in the price of natural gas will impact major producers including state-run Oil and Natural gas Corp (ONGC) and Reliance Industries (RIL). For ONGC, every $1 increase in the price translates into Rs 4,000 crore of revenue and Rs 2,300 crore of Profit After Tax (PAT) apart from tariff of gas-based power plants, fertilizer costs, CNG rates and PNG prices.
An ONGC official said with crude oil prices down, a gas price cut is likely. However, there is no clarity on the extent of the cut in gas price. “A downward revision in gas price would certainly impact ONGC’s bottom-line but it would be too early to predict the quantum as the quantum of price cut is still not clear,” he added.
Price of natural gas in India is now reviewed every six months and is applicable to all gas produced from nomination fields of ONGC and Oil India, New Exploration Licensing Policy (NELP) blocks, a few Pre-NELP blocks and Coal Bed Methane (CBM) blocks.
The government had in October increased gas price from the then existing $4.2 per mmbtu based on Net Calorific Value (NCV) to $5.61 per mmbtu. On GCV basis, the respective prices had increased from $3.79 per mmbtu to 5.05 per mmbtu. A media report had today said prices are likely to come down 10 per cent to $4.67 per mmbtu on GCV basis and $5.02 per unit on NCV basis.
The new gas prices are calculated based on a formula devised by a Committee of Secretaries headed by power secretary P K SInha. The committee adjusted an earlier formula worked out by a panel headed by former Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan which had proposed doubling the prices to $8.4 per mmbtu.
India’s gas production fell 13 per cent from 111 mmscmd in 2012-13 to 97 mmscmd last fiscal (2013-14). Output is expected to pick up marginally to 100 mmscmd (or 36 bcm) in the current fiscal including 24 bcm from ONGC, 2.8 bcm from Oil India (OIL) and 9.7 bcm from PSC regime blocks.
