Govt plans to bring uniform base price for city gas distribution

To boost consumption of natural gas under City Gas Distribution (CGD) and increase availability of gas, CNBCTV18 learns Ministry of Petroleum and Natural Gas has prepared a mechanism for uniform base price for gas. The uniform base price formula will be based on Regassified Liquified Natural Gas (RLNG) Compressed Bio Gas (Gas) and domestically produced gas.

The idea to bring in a uniform base price is to meet the increasing demand for gas required for CGDs which cannot be just met by domestic sources of gas. Uniform base price will help increase availability of gas from different sources and also meet the gas requirements of the CDGs.

It is expected that price of gas for CGDs will increase once uniform base price kicks in and at current pricing of all sources of gas it is expected to cost around $4 per mmbtu. The domestic gas price is at $2.9 per mmbtu for H2 of FY22.

The uniform base price will have an impact on the margins for the CGD companies and also consumers if the companies decide to pass on the cost. Once approve guidelines will be framed by the Petroleum and Natural Gas Regulatory Board (PNGRB).

This move is also expected increase share of natural gas in the energy basket to around 8-9 percent in the next 3-4 years from current 6.2 percent. The ministry has concluded all stakeholders discussion on uniform base price mechanism and it is expected to be approved within a fortnight.