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The government today raised the domestic price of natural gas by 10 per cent to $3.36 per unit in a decision that will lead to improved margins for producers like Oil and Natural Gas Corporation (ONGC) and Reliance Industries (RIL) but push the retail prices of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) and power across the country. Natural gas prices in the country are revised every six months based on a pricing formula notified in October 2014.
The formula pegs the price to the weighted average of four global benchmarks including US-based Henry Hub, Canada-based Alberta gas, UK-based NBP and Russian gas prices registered in the past one year with one quarter lag. The new price will be effective for the period between Oct 2018 and March 2019.
The current hike has pushed the gas price to the highest since October 2015 to March 2016 when $3.82 per unit price was paid to domestic producers. Gas price was last hiked to $3.06 per unit for April-September 2018 from $2.89 in the previous six months.
The government also increased the price cap on gas from discoveries in deep-water, ultra deep-water and high pressure-high temperature areas. The price for such fields would now be USD 7.67 per unit for six month beginning October 1 as compared to USD 6.78 currently, PPAC said.
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