The government has slashed natural gas price by 25% to $1.79. With this natural gas price in India touched the lowest rate on record. The Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) said the price of gas, which is used to generate electricity, make fertiliser and CNG for automobiles, has been cut to $1.79 per million British thermal unit for six months beginning October 1 from the current $2.39.
This is the third straight reduction in rate in one year. The price was cut by a steep 26% to $2.39 in April. The rate paid to producers of new gas from difficult fields such as deepsea has also been cut to $4.06 per mmBtu from $5.61. Natural gas price is set every six months on April 1 and October 1- each year based on rates prevalent in surplus nations such as the US, Canada and Russia.
The rate from October 1 is equivalent to the price paid to Oil and Natural Gas Corp (ONGC) and Oil India (OIL) prior to May 2020 when a formula based pricing was first introduced. While the cut in prices would mean widening of losses for India's top oil and gas producer ONGC, it may also lead to lower cost of production of electricity and CNG as well as lower piped natural gas prices.
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