New Delhi/Mumbai: The government today lowered the price of domestically produced natural gas by over 10% to $5.02 per mmBtu from $5.6 per unit, the first ever reduction in the rates of the fuel.
The new price will be effective from April 1.
Natural gas price was raised from $4.2 per mmBtu to $5.61 per mmBtu effective November 1, 2014.
The move will hit revenues of companies like state run Oil and Natural Gas Corporation and Mukesh Ambani’s Reliance Industries.
The drop is mainly because of slump in gas rates in the second half of 2014. Prices at international gas hubs (US Henry Hub) dropped from $6 per mmBtu in February to $3.78 per mmBtu in October.
On October 17, 2014, the BJP-led NDA government had used a new formula to fix price of domestically produced natural gas at $5.61 per mmBtu for the period up to March 31.
As per the formula, the rates were to be revised every six months using the average price at Henry Hub of US, National Balancing Point of UK, rates in Alberta and Russia with a lag of one quarter.
Sources also said ONGC and Oil India could be exempted from paying subsidies to fuel retailers in the March quarter.
The oil ministry also asked the finance ministry for a Rs 5,000 crore ($798.7 million) subsidy for the quarter ended March 31, said the government source, who asked not to be named as he is not authorised to speak to the media.
