CNG and PNG will be expensive, 40 percent increase in the price of natural gas

Sources said the increase in natural gas prices is likely to lead to increase in CNG and LPG rates in cities like Delhi and Mumbai. At the same time, the cost of generating electricity from gas plants and producing fertilizers will also increase.

40 percent increase in the price of natural gas

With the rise in energy prices around the world natural gas A record increase of 40 percent has been made on Friday. Due to this, the gas used for power generation, fertilizer making and driving vehicles is expected to become expensive in the country. According to an order issued by the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry, the rate to be paid for gas produced from old gas fields has been increased from the current $6.1 per million British thermal unit (MBtu) to $8.57 per MBtu. Has been done. At this rate, about two-thirds of the gas produced in the country will be sold. This will have a direct impact on CNG and PNG and it is feared that distribution companies may announce an increase in prices soon.

Effect of rise in prices in foreign market

According to this order, the price of gas extracted from difficult and new fields like D-6 block operated by Reliance Industries Limited and its partner BP Plc in KG basin has been increased from $9.92 to $12.6 per unit. This is the third increase in gas rates since April 2019. These have risen on the back of firming up of benchmark international prices. Natural gas is a major raw material for making fertilizers as well as for generating electricity. It is also converted into CNG and also used as Piped Natural Gas (PNG) ie LPG. The steep hike in rates is expected to push up the prices of CNG and PNG, which have already risen by over 70 per cent in the past one year.

Prices are fixed every 6 months

The government fixes gas prices every six months i.e. on April 1 and October 1. These prices are based on the prevailing rates in gas-surplus countries such as the US, Canada and Russia with a quarter of a year interval. Prices from October 1 to March 31 are based on average prices from July 2021 to June 2022 Is. Global rates have risen sharply during this period. Higher gas prices may further fuel inflation, which has been running above the RBI’s satisfactory level for the past eight months. The government has also constituted a committee to review the pricing formula. Sources said the increase in natural gas prices is likely to lead to increase in CNG and LPG rates in cities like Delhi and Mumbai. This will also increase the cost of generating electricity but will not cause any major problems to the consumers as the share of electricity generated from gas is very less. Similarly, the cost of production of fertilizers will also go up but the rates are unlikely to increase due to the subsidy given by the government. However, this decision is likely to increase the income of the producers.

Source link

Leave your vote

Related Articles

Back to top button

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.