Union Cabinet Approves To Impose Cap On Rates Of CNG, Piped Cooking Gas

Late evening on Thursday, April 6, 2023, the Union Cabinet Committee in its meeting approved to impose a cap or ceiling price to help cut CNG and piped cooking gas prices by up to 10%, first reported by the Business Today.

"As per the decision taken by the Cabinet Committee on Economic Affairs (CCEA), natural gas produced from legacy or old fields, known as administered pricing mechanism (APM) gas, will now be indexed to crude oil price, instead of pricing it based on gas prices in surplus nations such as the US, Canada, and Russia," Union Information and Broadcasting Minister Anurag Thakur told mediapersons after the cabinet meeting.

The approval of this new formula for pricing of natural gas will help to reduce prices of CNG and piped cooking gas.

Cabinet approved floor price of $4/MMBtu for APM (Administered Pricing Mechanism) gas, ceiling of $6.5/MMBtu as against current rate of $8.57.

As per the report rates of piped cooking gas and CNG have jumped 80 per cent in one year to August 2022. This occurred after international energy prices surged.

Post this decision, the new pricing method will be enforced from Saturday (8 April) the CNG price in Delhi will be reduced from Rs 79.56 per kg to Rs 73.59 and that of PNG from Rs 53.59 per thousand cubic meters to Rs 47.59. In Mumbai, CNG will cost Rs 79 per kg instead of Rs 87 and PNG will cost Rs 49 per scm instead of Rs 54.

At the April 1 revision, the APM gas price was kept on hold awaiting Cabinet's approval for the change in the pricing formula. If the old formula continued, prices of gas from legacy fields would have jumped upto $10.7 per mmBtu. But now the price of gas from difficult fields was cut to $12.11 per mmBtu.

The Kirit Parikh led committee was set up by the government in November last year to review the pricing formula for gas produced in the country, it recommended complete liberalisation of natural gas prices by January 1, 2027.

This panel recommended a floor price and a cap for gas from legacy and old fields, which make up two-thirds of all-natural gas produced in the country, which has been accepted, the one on annual increment and full deregulation has been changed.