Gas costs hiked 40%; CNG, PNG to price extra

Prices of pure fuel, which is used to generate electrical energy, make fertiliser and is transformed into CNG to run cars, had been on Friday hiked by a steep 40 per cent to file ranges, consistent with international firming up of vitality charges.

The fee paid for fuel produced from previous fields, which make up for about two-thirds of all fuel produced within the nation, was hiked to USD 8.57 per million British thermal models from the present USD 6.1, in keeping with an order from the oil ministry’s Petroleum Planning and Analysis Cell (PPAC).

Simultaneously, the value of fuel from tough and newer fields like those in Reliance Industries Ltd and its accomplice bp plc operated deepsea D6 block in KG basin, was hiked to USD 12.6 per mmBtu from USD 9.92, the order mentioned.

These are the very best charges for administered/regulated fields (like ONGC’s Bassein discipline off the Mumbai coast) and free-market areas (such because the KG basin).

Also, this would be the third improve in charges since April 2019 and comes on the again of firming benchmark worldwide costs.

Gas is an enter for making fertiliser in addition to producing electrical energy. It can also be transformed into CNG and piped to family kitchens for cooking functions. A steep improve in costs is more likely to replicate in greater charges for CNG and piped pure fuel (PNG), which has within the final one 12 months risen by over 70 per cent.

The authorities units the value of fuel each six months — on April 1 and October 1 — annually primarily based on charges prevalent in fuel surplus nations such because the US, Canada and Russia in a single 12 months with a lag of 1 quarter.

So, the value for October 1 to March 31 is predicated on the typical worth from July 2021 to June 2022. This is the interval when international charges shot by the roof.

As greater fuel costs can probably additional gas inflation, which has been stubbornly above the RBI’s consolation zone for the previous eight months, the federal government has arrange a committee to assessment the pricing system.

The committee, below former planning fee member Kirit S Parikh, has been requested to counsel a “fair price to the end-consumer” by September-end however the report is delayed.

The authorities had in 2014 used costs in fuel surplus international locations to reach at a system for regionally produced fuel.

The charges in keeping with this system had been subdued and at instances decrease than the price of manufacturing until March 2022 however rose sharply thereafter, reflecting the surge in international charges within the aftermath of Russia’s invasion of Ukraine.

The worth of fuel from previous fields, that are predominantly of state-owned producers like ONGC and Oil India Ltd, was greater than doubled to USD 6.1 per mmBtu from April 1.

Similarly, the charges paid for fuel from tough fields comparable to deepsea KG-D6 of Reliance went as much as USD 9.92 per mmBtu from April 1 in opposition to USD 6.13 per mmBtu.

The panel has been requested to advocate a good worth to end-consumers and likewise counsel a “market-oriented, transparent and reliable pricing regime for India’s long-term vision for ensuring a gas-based economy,” in keeping with an oil ministry order.

The authorities needs to greater than double the share of pure fuel within the major vitality basket to fifteen per cent by 2030 from the present 6.7 per cent.

The volume-weighted common of the value prevalent in a 12-month interval in US-based Henry Hub, Canada-based Alberta fuel, UK-based NBP and Russia fuel are used to repair costs for administered fields of ONGC and Oil India Ltd.

For tough fields like discoveries in deepwater, ultra-deepwater and excessive pressure-high temperature areas, a barely modified system is utilized by incorporating the value of LNG, which too had shot by the roof in 2021.

Reliance-bp operated KG fields are categorised as tough fields.

Sources mentioned the rise in fuel worth is more likely to end in an increase in CNG and piped cooking fuel charges in cities comparable to Delhi and Mumbai.

It may also result in an increase in the price of producing electrical energy however customers could not really feel any main pinch because the share of energy produced from fuel could be very low.

Similarly, the price of producing fertiliser may also go up however as the federal government subsidises the crop nutrient, a rise in charges is unlikely.

For producers, it is going to herald greater revenues