It is expected that basic amenities such as electricity and fuel in several cars are set to get expensive as the Centre has made a record hike in the natural gas prices across the nation. The gas prices have been hiked by 40 percent, giving rise to major expenses for the common man.
As per the newly updated prices of fuel, the rates of natural gas, which is used to generate electricity, make fertiliser, and is converted into CNG to run automobiles, were on Friday hiked by a steep 40 percent to record levels, in step with global firming up of energy rates.
The rate paid for gas produced from old fields, which make up for about two-thirds of all gas produced in the country, was hiked to USD 8.57 per million British thermal units from the current USD 6.1, according to an order from the oil ministry's Petroleum Planning and Analysis Cell (PPAC).
Simultaneously, the price of gas from difficult and newer fields like the ones in Reliance Industries Ltd and its partner bp plc operated deepsea D6 block in KG basin, was hiked to USD 12.6 per mmBtu from USD 9.92, the order said.
These are the highest rates for administered/regulated fields (like ONGC's Bassein field off the Mumbai coast) and free-market areas (such as the KG basin). Also, this will be the third increase in rates since April 2019 and comes on the back of firming benchmark international prices.
This adds to the steep increase in CNG and piped natural gas (PNG) rates, which have already seen a hike of around 70 percent over the last one year. The hike in the prices comes as the global market for natural gas rates has shot through the roof in the midst of the Covid-19 pandemic.
As higher gas prices can potentially further fuel inflation, which has been stubbornly above the RBI's comfort zone for the past eight months, the government has set up a committee to review the pricing formula.
(With PTI inputs)
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