CNG Prices To Go Up? What We Know So Far

The Indian government raised the price of natural gas produced from old legacy fields called APM by 4% on Monday, where the key input used to make CNG and produce electricity and product fertilizer.

The APM price has been hiked to $6.75 per million British thermal units effective April 1 from $6.50 per MMBtu, the Petroleum Planning and Analysis wing of the Oil Ministry said in a notification.

How Is APM Gas Produced?

APM gas is produced by state-owned firms Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) from fields that were given to them on the basis of nomination.

This gas is also used as input that is used in the cooking gas piped to household kitchens as well as turned into CNG for running automobiles, making fertilizers and producing electricity.

Why Has The Hike Been Announced?

A roadmap had been laid out by the government and this is the first increase in the APM gas price in two years in accordance with that.

In April 2023, an expert committee report to price the bulk of domestically produced natural gas at 10% of the monthly average import price of crude oil with a floor of $4 per million British thermal unit and a cap of $6.5 was accepted by the Union Cabinet.

The government had been playing with the recommendation of a $0.50 per MMBtu annual increase till full deregulation in 2027. The Cabinet had then decided that rates will not change for two years and will be increased by $0.25 annually thereafter.

According to a PTI report, after the April 2023 decision, APM gas prices are revised on a monthly basis but are subject to ceiling and floor prices. The ceiling price now is USD 6.75 per MMBtu.

While its prices had seen fluctuations in the years running up to the April 2023 decision. From a low of USD 1.79 per mmBtu in 2021 to a high of USD 8.57 for the 6-month period ending March 2023.

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