New Pricing Mechanism Launched! PNG And CNG Rates To Become Cheaper, Check Here

India aims to increase the shares of natural gas in the primary energy mix from the current 6.5 per cent to 15 per cent by 2030

Written by Alina Khan April 7, 2023

PNG, CNG prices to reduce

After the cabinet meeting, Union Minister Anurag Thakur said that the central government has approved a new method in order to fix the rates of natural gas. Now onwards, the natural gas produced from the old field, known as APM gas, is all set to link to crude oil prices instead of gas rates in surplus nations such as the United States, Canada and Russia, the union minister said.

PNG and CNG cost cheaper

Speaking to the media, the oil secretary, Pankaj Jain said this development will make the piped natural gas (PNG) cheaper by 10 per cent and lower the cost of compressed natural gas (CNG) by 6 per cent to 9 per cent.

In continuation to various initiatives taken under the leadership of PM Sh @narendramodi Ji to protect the interest of consumers by reducing the impact of increase in international gas prices on gas prices in India #UnionCabinet approves revised domestic gas pricing guidelines! pic.twitter.com/nKX44eiW46

— Hardeep Singh Puri (मोदी का परिवार) (@HardeepSPuri) April 6, 2023

Moreover, the central government will issue a notification today to announce this new development and the decision will come into action from Saturday onwards.

While referring to India’s crude purchase and how much of it would be linked with fixing the price of natural gas, the government said, “The price of such natural gas shall be 10 per cent of the monthly average of Indian Crude Basket and shall be notified on a monthly basis.”

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Main agenda of this development

In a statement released via the Press Information Bureau, the country aims to increase the shares of natural gas in the primary energy mix from the current 6.5 per cent to 15 per cent by 2030. The reforms will help expand the consumption of natural gas and will contribute to the achievement of the target of emission reduction and net zero.

Taking to Twitter, the oil minister, Hardeep Puri said that the move will protect the interest of consumers.

“In continuation to various initiatives taken under the leadership of Prime Minister Narendra Modi to protect the interest of consumers by reducing the impact of the increase in international gas prices on gas prices in India, the Union Cabinet approves revised domestic gas pricing guidelines,” he wrote on Twitter.

In continuation to various initiatives taken under the leadership of PM Sh @narendramodi Ji to protect the interest of consumers by reducing the impact of increase in international gas prices on gas prices in India #UnionCabinet approves revised domestic gas pricing guidelines! pic.twitter.com/nKX44eiW46

— Hardeep Singh Puri (मोदी का परिवार) (@HardeepSPuri) April 6, 2023

4 gas trading hubs

Taking notes from the current scenario, the domestic gas rates are fixed every six months based on prices at four gas trading hubs – Henry Hub, Albena, National Balancing Point (Britain) and Russia.

Further, the central government said the pricing method based on the four gas hubs had a significant time lag and very high volatility, so the need for this reform was felt.

They said, “The revised guidelines make prices linked to crude, which is a practice now followed in most industry contracts, is more relevant to our consumption basket and has deeper liquidity in global trading markets, on a real-time basis.”