Kirit Parikh committee to review local gas pricing formula to tame inflation

The Ministry of Petroleum and Natural Gas has raised the benchmark price of administered domestic natural gas on Friday, even as the Kirit Parekh panel is working on the pricing formula.

Prices have increased by 40.49% over the previous six months for gas produced from old fields to $8.57 per million metric British thermal units.

The ceiling price for domestic gas produced from challenging deep water and high-pressure-and-high-temperature discoveries has been hiked by 25.60% over the previous six months to $12.46 per mmBtu, as per an order issued by the Petroleum Planning and Analysis Cell.

The prices will be effective between Oct. 1, 2022 to March 31, 2023, the order said.

The price hike has come against the backdrop of rising spot market prices of natural gas, which rose to a high of $60 per mmBtu in August before falling to $35 per mmBtu in September. It remains relatively high compared to domestic gas prices.

The central government has also appointed a high-powered panel led by former Planning Commission Member Kirit Parikh to work on the pricing formula and ways to reduce the impact on domestic customers. The panel was to submit its report by Sept. 30, which would then require cabinet approval.

India prioritises the distribution of domestic natural gas amongst sectors, such as city gas distribution, fertiliser and power.

The country still needs to import roughly half of its requirement of 165 mmscmd in the form of liquefied natural gas.