The Kirit Parikh panel to review natural gas prices in India has recommended a price band of $4-6.50/unit for gas from old fields to protect consumers from market volatility. In its submissions to the Oil Ministry on Wednesday, it has also asked the government to remove caps on gas prices in three years, as reported by Moneycontrol.
The report added that gas prices might increase yearly until they become market-determined by January 1, 2027.
The panel was set up in September to review India’s gas pricing formula to ensure fair prices to consumers after state-set prices of gas from old fields and a ceiling price for output from difficult blocks rose to a record high.
On October 1, natural gas prices increased by 40 per cent as part of the government’s review.
Currently, India fixes prices of gas produced from the old fields of state-run Oil and Natural Gas Corp and Oil India Ltd. It sets a ceiling price for output from difficult production areas such as Reliance Industries’ east coast block.
The two sets of prices – tied to global benchmarks, including Henry Hub, Alberta gas, NBP and Russian gas – are annually revised in April and October. Old fields account for about 80 per cent of India’s annual gas output of about 91 billion cubic metres.
The government wants to more than double the share of natural gas in the primary energy basket to 15 per cent by 2030 from the current 6.7 per cent.
The new formula would be implemented once the Cabinet gives the go-ahead.
(With agency inputs)