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Government soon may hike Natural gas prices by 10%

ONGC

The government is likely to increase the prices of domestically produced Natural gas by 10% to over $3.72 per million British thermal unit. The move will give impetus to companies like Reliance industries and ONGC. The decision of increasing the price is not yet formally announced by the government but sources close to matter confirm a hike in prices can be implemented from the coming April 1.

This if done will be fourth straight increase in price of Natural gas by government.

Gas prices are revised by the government twice a year, based on the aggregate average of Natural gas price prevailing in the gas rich countries like Russia, China and Canada.

The hike in price will definitely increase the earnings of Oil and Natural Gas Corporation (ONGC) and Reliance Industries Limited but can also lead to an increase in the compressed Natural Gas (CNG). CNG uses Natural gas as one of its inputs.

Natural gas prices last time was increased  on October 1, 2018, by 10% when rates moved up to $3.36 per mmBtu from $3.06.

Reportedly, India imports half of its Natural gas need, which costs double the domestic rate. Thus, the move of the government will bring good margins to the Indian companies and will boost their business.

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