The government announced on Saturday that the domestic natural gas price is set to increase from its current rate of $8.60 per metric million British thermal unit (mmBTu) to $9.20 mmBTu starting from October 1st. This adjustment, the second consecutive monthly increase, will be in effect throughout the entire month of October 2023, as stated in a notification by the Ministry of Petroleum and Natural Gas.
The rise in natural gas prices is anticipated to have an impact on consumers, as city gas distribution companies are expected to adjust the prices of compressed natural gas (CNG) and piped natural gas (PNG), commonly used for cooking purposes.
This pricing revision follows a new methodology implemented by the government, where rates are determined on a monthly basis based on the Indian crude basket rates from the previous month. This marks a departure from the previous approach, which considered the average prices over the last year from four major global gas trading hubs: National Balancing Point (UK), Russian Gas, Henry Hub, and Albany. Under the old method, domestic rates remained fixed for a six-month period.
The shift in the pricing formula was initiated after a government-appointed committee, established in October of the previous year, recommended a new approach for determining domestic gas prices. This recommendation relied on Indian crude basket prices from the preceding month, ultimately leading to the adoption of the current pricing methodology.