The prices of piped natural gas (PNG) for household work, compressed natural gas as fuel for vehicles among others would drop down with the government today guaranteeing the new strategy for domestically produced gas and placing an upper price cap of $6.5 per mBtu.

The Cabinet Committee on Economic Affairs has agreed on the floor price of $4 per mBtu for APM (Administered Pricing Mechanism) gas, ceiling of $6.5 per mBtu , opposing the current rate of $8.57. Rates will be declared after the evaluation on monthly basis instead of current regulation of bi-annual revision.

As per the sources, the calculated levy will stay in existence for 2 years for the targeted fields only and after 2 years, gas price will rise by $0.25 per mBtu. This stand against the Kirit Parikh panel recommendation of free pricing starting January 2027 for gas produced from these legacy fields and from January 2026 for difficult fields. It had also suggested the ceiling rate for gas from legacy or old fields, called APM gas, will be increased by $0.50 per mmBtu annually before free pricing.

Anurag Thakur, information and broadcasting minister said “the price of such natural gas shall be 10% of the monthly average of Indian Crude Basket and shall be notified on a monthly basis. For the gas produced by ONGC & OIL from their nomination blocks, the Administered Price Mechanism (APM) price shall be subject to a floor and a ceiling. Gas produced from new wells or well interventions in the nomination fields of ONGC & OIL, would be allowed a premium of 20% over the APM price.”

Currently, the new guidelines provided for the declaration for domestic gas prices on a trial of 6 month period based on the volume weighted prices is done after the working of four gas trading hubs – Henry Hub, Albena, National Balancing Point (UK), and Russia for a period of 12 months and a time lag of a quarter.