Natural gas price likely to be hiked by 8%

Natural gas price in India is likely to be hiked by 8 per cent from April 1 driven by an increase in rates in reference markets including US Henry Hub.

Price of natural gas, used for generating power and making fertiliser and petrochemicals as well as CNG for automobiles, is likely to rise to $2.7 per million British thermal unit for the period from April 1, 2017 to September 30, 2017 from current $2.5 per mmBtu, industry sources said.

This will be the first increase in domestic gas prices in two years.

Rates may further rise to $3.1 per mmBtu in second half of 2017-18 fiscal (April to March).

As per



the mechanism approved in October 2014, the price of domestically produced natural gas is to be revised every six months — April 1 and October 1 — using weighted average or rates prevalent in gas-surplus economies at Henry Hub of US, National Balancing Point of the UK, rates in Alberta (Canada) and Russia with a lag of one quarter.

So, the rates for April 1, 2017 to September 30, 2017 period will be based on average price at the international hubs during January 1, 2016 to December 31, 2016.

Sources said prices in the reference markets for 2016 are known and so the rates in first half of fiscal year beginning April 1 can be calculated.