Govt looks set to cut gas rates by 17% to $3.15 per mmBtu
Government is likely to cut natural gas prices by 17 per cent from Friday to $3.15 per million British thermal unit from current $3.82. As per the new gas pricing formula approved by the NDA-government in October 2014, gas prices are to be revised every six months and the next change is due on April 1.
Oil Ministry is likely to announce anytime a revised price of about $3.15 per mmBtu for the period April 1, 2016 to September 30, 2016, sources privy to the development said.
As per the formula, rates are to be determined on a semi-annual basis and calculated based on a volume weighted average of rates in gas surplus nations of the US, Canada and Russia, based on the 12-month trailing average price with a lag of three months.
Using benchmark prices for the period of January 1, 2015 to December 31, 2015, gas price for the period April 2016 to September 2016 comes about $3.15 per mmBtu as against $3.82 currently, they said. On a net-calorific value (CV) basis, the gas price is likely to be $3.50 per mmBtu as compared to $4.24 currently. The Ministry is also likely to announce a cap price based on alternate fuels for undeveloped gas finds in difficult areas like deepsea. The cap for April 1 to September 30 is likely to be $7, they said.
Natural gas prices were last cut on October 1 by a steep 18 per cent to $3.82 per mmBtu on gross calorific value (GCV) basis for six months, from the $4.66 per mmBtu.
On net calorific value (NCV) basis, the new gas price for October 1, 2015 to March 31, 2016 came to $4.24 per mmBtu as compared to $5.18 previously.
Using prevailing price in gas surplus nations like the US, Russia and Canada, the government had in October 2014 announced a new pricing formula that led to rates rising by about 33 per cent to $5.61 per mmBtu on NCV basis for period up to March 31, 2015 from the long-standing price of $4.2. The rates, on net calorific value (NCV) basis, dropped to $5.05 per mmBtu for six-month period beginning April 1, 2015.