From October, your electricity bill could shrink by almost 40 paise per unit, and your piped natural gas (cooking fuel) and compressed natural gas (transport fuel) could become cheaper, too.
That’s because the government on Friday lowered the price of domestically produced gas by 18 per cent from $3.06/unit to $2.50/unit (gas is measured in million British thermal units, or mmBtu) for the October 2016-March 2017 period on gross calorific value (GCV) basis.
“Going by the thumb rule, every dollar increase or decrease in gas price today implies ₹2.50 change in CNG price and ₹1.90 in PNG prices. But the actual calculation will depend on the geography, the exchange rate prevailing, the quantum of domestic gas being used by the retailer, and local issues,” an industry official said.
While the price fall is good for the consumers, it is a setback for explorers such as ONGC, Oil India, and Reliance Industries.
According to ONGC officials, the reduction will impact the company’s revenues by ₹1,100-1,200 crore for the balance of the fiscal, and its profit by ₹600-700 crore.
However, the government allows explorers a higher price for gas produced from deep and ultra-deep waters. For produce from such areas, the government has capped the price at $5.30 mmBtu. The government reviews gas price on a half-yearly basis.
India’s domestic crude oil and natural gas production fell in August year-on-year. Industry trackers believe that this drop in price will put further pressure on explorers. However, ONGC Chairman and Managing Director DK Sarraf told BusinessLine, “This reduction will not impact the company’s investment plans.”