India raises gas prices from April

Domestic natural gas price rose by 25 cents to $6.75 per mmbtu (million British thermal unit) for April after the previously decided annual increase kicked in, according to an oil ministry notification.

The increase will marginally push up cooking costs for households using piped natural gas. Running costs of CNG vehicles may go up while city gas distributors and fertiliser makers will also be affected.

The price ceiling for natural gas from difficult fields barely changed to $10.04 per mmbtu for the next six months from $10.16.

The oil ministry notifies the gas price ceiling at the end of March and September every year for the following six months.

The ceiling is the maximum producers such as Reliance, BP and ONGC can receive for gas from their fields in deep sea or high-pressure high-temperature areas.

The government declares a separate domestic natural gas price every month for output from fields operated by ONGC and Oil India under the so-called administered price mechanism (APM). The price is 10% of the monthly average of the Indian crude basket but can’t breach the floor or the ceiling decided by the cabinet in 2023.

The crude-linked price is $7.26 per mmbtu for April, down from $7.8 per mmbtu in March. Due to the ceiling, the effective price, however, is $6.75 per mmbtu for April. In March, the effective price was $6.5.

In April 2023, the cabinet had decided that domestic natural gas prices would move in a price band of $4-$6.5 per mmbtu. The ceiling was supposed to rise by 25 cents every year after March 2025, which is what has raised the effective price for April.