In the coming days, there may be an increase in the prices of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) across the country. The government has increased the prices of natural gas produced from old fields under the Administered Pricing Mechanism (APM) by 4 percent.
The gas produced from these fields is the main raw material for the production of CNG, electricity, and fertilizers. In such a situation, the increase in the price of APM gas can lead to a jump in the prices of CNG, which will have a direct impact on the pocket of the common man. So let us know how much this decision of the government can affect the common people.
Increase in APM gas prices
According to the notification of the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum, the price of APM gas has been increased from ₹ 6.50 per unit (MMBTU) to ₹ 6.75 per unit from April 1. APM gas is produced by state-run oil companies Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) from fields allocated to them.
The gas produced from these fields is used for piped cooking gas (PNG) in households, CNG for vehicles, and as raw material for fertilizers and power generation. This is the first hike in the price of APM gas in the last two years, which is in line with the government’s existing framework.
Read More:- EPFO’s Major Update: Now Withdraw Up to ₹5 Lakh Instantly with Auto-Settlement
Read More:- Major Change in FD Rules: Higher TDS Exemption Limit Announced – Details Inside
How prices are decided
In April 2023, the Union Cabinet accepted the report of an expert committee to fix the wholesale price of domestically produced natural gas at 10 percent of the monthly average import price of crude oil. It fixed a minimum price of ₹4 per million British thermal unit (MMBTU) and a maximum of ₹6.5.
The government also amended the recommendation of an annual increase of ₹0.50 per unit till full regulation in 2027. The Cabinet had decided that the rates would not be changed for two years and thereafter an annual increase of ₹0.25 would be made. The hike announced on Monday is in line with that decision.
The new prices will remain applicable for one year
The Petroleum Planning and Analysis Cell (PPAC) said that the price of APM gas should have been ₹7.26 per unit for April 1 to April 30, 2025, based on 10 per cent indexation on the price of crude oil i.e. the effect of inflation. But this price was subject to a ceiling. The price ceiling has been increased from ₹6.50 per unit to ₹6.75. This ceiling will be effective from April 2025 to March 2026 and will increase by another ₹0.25 per unit in April next year.
Before 2023, prices were fixed on a half-yearly basis
Before April 2023, the price of gas produced from the fields under the APM system was determined on a half-yearly basis based on a formula. This determination was done under a formula based on average international prices at four gas trading centres.
APM gas accounts for 70 percent of the total domestic gas production. APM gas is provided to city gas distributors for the supply of CNG and piped cooking gas to households. It accounts for 60 percent of their sales volume. After the April 2023 decision, 1 APM gas prices are revised every month, but they are subject to maximum and minimum prices. The maximum price is now ₹ 6.75 per unit.
Read More:- 8th Pay Commission Confirmed: Huge Salary Hike Expected for Govt Employees