Gas price hiked, power cost rises
In a far-reaching decision, the government on Wednesday raised natural gas prices by more than double to $4.20 per mmBtu, a move that will result in a rise in power and fertiliser production cost and rise in CNG rates.
The Cabinet hiked the price of gas sold to power, fertilizer and city gas projects from Rs 3,200 per thousand cubic meters ($1.79 per million British thermal unit) to Rs 6,818 per thousand cubic meters ($3.818 per mmBtu), the information and broadcasting minister, Ms Ambika Soni, said.
After adding royalty, the price for user industries would be Rs 7,500 or $4.2 per mmBtu, at par with the rate at which Reliance sells its gas.
Mr Apurva Chandra, joint secretary in the oil ministry, said the decision that would come into effect once the decision is notified in the next few days, would result in a rise in fertiliser production cost, power generation tariff and CNG price.
Fertiliser prices will not be increased as the government subsidises the sector. But today’s decision would result in rise in fertiliser subsidy by Rs 3,500 crore. “The government stands to gain (in royalty) an amount larger than this subsidy payout,” he said adding the impact to the government would be positive.
The new gas price on an overall basis would result in 2.75 per cent increase in power tariff and up to 20 per cent hike in price of compressed natural gas (CNG) sold to automobiles in cities like Delhi. CNG in Delhi currently costs Rs 21.90 per kg. — PTI
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