The Union government has raised the price of domestically produced gas by 62 per cent to $2.90 per million British thermal units (mmBtu) as lower production amid higher demand increased North American and European gas prices. The ceiling price for gas to be produced from difficult fields, which have higher pricing and marketing freedom, has been raised by 69 per cent to $6.13/mBtu.
The new prices will be effective for six months starting October 1. The move could have adverse implications for use industries including power and fertilisers, could spike inflation and strain the country’s current account. It may also impact farmers if the government doesn’t hike subsidy on fertilisers to offset the rise in prices of imported urea and DAP. City gas units may pass on the price hike to consumers.
