Indraprastha Gas Ltd has hiked the piped gas prices by 33 paise per standard cubic metre in Delhi with effect from Wednesday, 26 July 2017, it said in a notification to its customers. The piped domestic cooking gas in Delhi will now cost Rs 25.19 per scm including VAT (value added tax). In Delhi’s neighbouring city Noida, the hike is 36 paise per scm to take the revised price to Rs 25.19 per scm, it said.
India reduced natural gas prices in April to $2.48 per mmBtu (metric million British thermal unit), with it being the seventh straight cut in two-and-a-half years, against an expected rise in the prices. The government had approved a new formula in October 2014 to set the price of the natural gas produced at the domestic fields and revise it every six months based on the movement in prices in the US (Henry Hub), the UK (National Balancing Point), Canada (Alberta) and Russia.
The producers revise the price with a lag of one quarter. Thus, the Apr-Sep 2017-18 prices will be revised in accordance with the reference rates during Jan-Dec 2016. Natural gas price has continuously fallen in India since the application of the new formula, and has reduced to less than half of the $5.05 per mmBtu fixed in October 2014.
City gas distribution companies such as Indraprastha Gas Ltd depend on this natural gas price to further fix the prices automobile CNG and domestic PNG, which they sell to the customers. The cause of the rise in IGL’s prices now is not immediately known.
Industry experts expect the government to raise the domestic natural gas prices in October in line with the rising benchmark reference rates in major global markets. This has a strong strong likelihood of leading to rise in prices of PNG (piped domestic cooking gas) and CNG (auto fuel), as it will put pressure on margins of the retail fuel distributors, fertiliser makers and power producers, which use natural gas as feedstock.