Change in Domestic Gas Pricing Policies Expected to Reduce CNG and PNG Price: Here’s How

Change in Domestic Gas Pricing Policies:-

It is expected that the steps recently taken by the Union Government in the field of domestic gas pricing Willhave a positive impact on making CNG and PNG gas more affordable for the general public.

The Change in Guidelines

The guidelines for domestic gas pricing were revisited by the Union on 5th April 2023, on the recommendations of the Kirit Parikh Committee, and the very next day a ceiling price was imposed upon CNG and PNG gas. This policy will be made enforceable from April 8, 2023.

Further, the Central Government has also assured that from time to time, it will be releasing adequate notifications to keep the income of domestic gas producers stable and unaffected by difficult market conditions.

The Change in Pricing System

Earlier, domestic gas was priced according to established pricing systems of the US, Russia, and Canada, known as Administered Price Mechanism (APM). All these countries run on a surplus of gas, unlike India. To overcome this flaw, the measuring reference for pricing has now been changed to imported crude oil. The price will now be fixed at 10% of the rate at which India imports crude oil. 

According to this rate, the price stands at 8.5$ per barrel, however, after a ceiling price of 6.5$ has been imposed upon this amount, it brings down the overall price of domestic gas.

Utility of The Changed Policy

In recent months, the hike in domestic gas prices was nearly 80% due to unwelcome market forces on the international front. However, after the above-mentioned Policy change has been adopted, it is expected that prices will come down by 10%.

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