Price of Natural Gas in India likely to Witness a Hike of 8 Percent from April
Due to increase in rates in reference markets consisting US Henry Hub, the price of natural gas in India may be hiked by eight percent from 1 April, 2017.
According to industry sources, the price of natural gas which is used for generating power and manufacturing petrochemicals and fertiliser as well as CNG for automobiles will likely increase to $2.7 per million British thermal unit for the period starting from 1 April, 2017 to 30th September, 2017 compared to the existing $2.5 per mmBtu.
In 2 years, this will be the first in domestic gas prices.
There may be further increase in the price to USD 3.1 per mmBtu in the 2nd half of fiscal year 2017-18.
Based on the mechanism approved in October, 2014, domestically produced natural gas price is to be revised every 6 months (April 1 – October 1) using weighted or rates prevalent in gas surplus economies at Henry Hub of United States, National Balancing Point of the UK, rates in Russia and Alberta
(Canada) with a lag of 1 quarter.
Therefore, rate of gas price for 1 April, 2017 to 30 September, 2017 will depend on the average price at the international hubs during January 1, 2016 to December 31, 2016.
A hike in the price would be good news for upstream gas producers but, it would also mean higher raw material cost for CNG and PNG and would result in hike in retail prices.
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