Govt may cut gas price for producers by 20% in Oct

Natural gas price paid to producers like state-owned Oil and Natural Gas Corp (ONGC) and Reliance Industries is likely to fall 20% to $2.45 in October.

This will be the fourth reduction in last 18 months following the formula approved by the government in October 2014.

Price of natural gas produced from existing fields of ONGC and RIL is likely to fall to $2.45 per million British thermal unit with effect from October 1 as opposed to $3.06 currently, a senior official said.

This rate is on gross calorific value (GCV) basis. The gas price was last cut on April 1 from $3.82 per mmBtu to $3.06 per mmBtu. On a net-calorific value (NCV) basis, the gas price was on that day cut to $3.4 per mmBtu as compared to $4.24 previously.

On NCV basis, the new gas price is likely to be $2.7 from October 1.

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 October 1.

The reduction in natural gas prices would mean lower raw material cost for compressed natural gas (CNG) and natural gas piped to households (PNG) and would translate into reduction in retail prices.