Overview
The government has approved a new formula to fix the prices of CNG and PNG. After this, the prices of CNG and PNG in the country can decrease by up to 10 percent. Not only this, now instead of 6 months, the prices of CNG and PNG will be fixed every month.
Soon the prices of CNG-PNG are going to come down in the country. Information and Broadcasting Minister Anurag Thakur said that domestic gas prices have now been linked to imported crude instead of international hub gas. This will reduce the cost of both these gases by 10 per cent.
HIGHLIGHTS:-
- 10 percent price to drop in CNG-PNG ?
- Kirit Parikh Committee
- Price will be fixed every month
- Impact on Fuel Price
Anurag Thakur said that after this decision, the price of domestic gas will be 10 percent of the price of Indian crude basket. After this decision of the government, the price of PNG will decrease by 10 percent and the price of CNG by 7-9 percent.
Presently, CNG price in Delhi is Rs 79.56 per kg and PNG price is Rs 53.59 per kg. CNG price in Mumbai is Rs 87 and PNG is Rs 54 per kg.
From August 2022 till now i.e. in one year, there was an increase of 80 percent in the price of CNG. This decision will be of great benefit to domestic consumers and those who drive CNG cars. Now the government will change the price of CNG and PNG every month.
Earlier, the prices of gas were being changed twice a year. The Parikh Committee has also recommended bringing gas under the ambit of GST. There has been talk of increasing it from 3 percent to 24 percent. This will help in promoting the gas market.
What is the government’s decision?
- The guideline came in October 2014 for the prices of domestic gas which were fixed till now. Under this, the prices in the domestic market were fixed on the basis of the prices in the international market.
- Now the government has changed this guideline. In October 2022, the government had formed a committee under the chairmanship of Kirit Parikh to fix the prices of domestic gas. On the suggestions of this committee, the government has amended the guidelines.
- Anurag Thakur told that now the price of domestic gas has been linked to imported crude oil instead of international hub gas and the price of domestic gas will now be 10 percent of the international price of Indian crude oil. Suppose if the Indian crude basket price is $85, then the domestic gas price in India would be $8.5 i.e. 10% of that. This price will now be fixed every month instead of 6 months.
- He told that both floor price and ceiling price of domestic gas would be fixed. The floor price has been fixed at $4 and the ceiling price at $6.5. Floor price means minimum price and ceiling price means maximum price. The ceiling price has now been fixed for two years. This cap will be increased after two years.
Benefits
- The two major changes that have taken place now will benefit both the gas companies and the common people. how is that? Therefore, prices will be fixed on the Indian crude basket instead of international gas hubs.
- Another reason is that both the floor price and the ceiling price have been fixed. So even if the price decreases too much, the companies will not be harmed and if it increases too much, the people will not be harmed.
Why import crude instead of international gas hubs ?
Till now the prices of domestic gas were decided by the four major gas trading hubs of the world. These hubs are Henry Hub, National Balancing Point (UK) and Russia. The average of the last one year’s price of these four gas trading hubs was taken and then it was applied at an interval of three months.
The prices used to fluctuate rapidly in the international market and this had an impact on the gas prices. But now the price of domestic gas will be fixed on the basis of the price of gas imported by India from abroad.
Floor and Ceiling price method
- Currently, the price of Indian crude basket is $85 per barrel. 10 percent of this became $ 8.5 per barrel. But the government has fixed its maximum price at $6.5.
- Anurag Thakur told in the press conference that the floor and ceiling price of domestic gas prices have been fixed for two years. After this, it will be increased by $ 0.25.
| City Name | CNG Prices Current (Rs/kg) | CNG Prices Expected (Rs/kg) | PNG Prices Current (Rs/kg) | PNG Prices Expected (Rs/kg) |
| Delhi | 79.56 | 73.59 | 53.59 | 47.59 |
| Mumbai | 87 | 79 | 54 | 49 |
| Bengaluru | 89.5 | 83.5 | 58.5 | 52 |
| Meerat | 91 | 83 | 58.5 | 52 |
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