Latest news with #AdministeredPriceMechanism
Time of India
2 days ago
- Business
- Time of India
Govt cuts APM gas price for first time in 2 years
For the first time in two years, the government has reduced the price of natural gas used for producing CNG for vehicles and cooking gas, reflecting a decline in benchmark rates. The price of natural gas from legacy fields allocated to state-owned ONGC without auction has been reduced from USD 6.75 to USD 6.41 per million British thermal units (mmBtu), according to a notification from the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC). The reduction, which is the first since the government in April 2023 implemented a new formula to price such gas, will aid city gas retailers like Indraprastha Gas Ltd , Mahanagar Gas Ltd and Adani-Total Gas Ltd who had been reeling under cost pressures from rise in input cost. In April 2023, the Union Cabinet accepted an expert committee report to price on a monthly basis the gas from legacy fields, called APM gas, at 10 per cent of monthly average import price of crude oil with a floor of USD 4 and a cap of USD 6.5 per mmBtu. The cap price was to remain unchanged for two years and rise by USD 0.25 annually thereafter. In line with this, the cap rose to USD 6.75 per mmBtu in April. In the first two years, the price of gas using this formula ranged between USD 7.29 per mmBtu and USD 9.12 but the cap ensured that the rate were fixed at USD 6.50 per mmBtu. In April, the price according to this formula came to USD 7.26 per mmBtu but the final rate was USD 6.75 in line with higher cap. In May, the price came to USD 6.93 but was capped to USD 6.75 for consumers. Since there has been a fall in international oil prices in view of uncertain demand outlook, the Indian basket of crude oil averaged around USD 64 in May. Using this as a benchmark, the APM gas price came to USD 6.41 per mmBtu on gross calorific value (GCV) basis, according to PPAC. "For gas produced by Oil and Natural Gas Corporation/Oil India Ltd from their nomination fields, the APM price shall also be USD 6.41 per mmBtu on GCV basis" for the period June 1, 2025 to June 30, 2025, PPAC said. The fall in benchmark also means that the price of gas that ONGC produced from new wells in the APM fields would also come down. The government had allowed ONGC to charge 12 per cent of the oil price for the gas coming from new wells it drills. The higher price was to make up for the capex incurred in drilling new wells. As much as 5 million standard cubic meters per day of gas - or a 10th of all gas produced by ONGC - comes from new wells, according to industry sources. APM gas is one produced by state-owned firms Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) from fields that were given to them on nomination basis. This gas is the 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. Prior to April 2023, the price of gas produced from fields covered under the Administered Price Mechanism (APM) regime -- which accounts for 70 per cent of domestic gas production -- was determined semi-annually based on a formula that benchmarked it to average international prices at four gas trading hubs. APM gas is provided to city gas distributors for supply to CNG and residential PNG segments, which together accounts for 60 per cent of their sales volume. Subsequent to the April 2023 decision, APM gas prices are revised on a monthly basis but subject to ceiling and floor price. The ceiling price now is USD 6.75 per mmBtu and will rise by another USD 0.25 per mmBtu in April next year. APM gas prices had seen wide 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 ended March 2023. The rate for difficult fields like KG-D6 of Reliance Industries has been set at USD 10.04 per mmBtu for six months beginning April 1 as compared to USD 10.16 in the preceding six months period, according to PPAC.
&w=3840&q=100)
Business Standard
2 days ago
- Business
- Business Standard
Govt cuts natural gas price for CNG, cooking use for first time in 2 yrs
For the first time in two years, the government has reduced the price of natural gas used for producing CNG for vehicles and cooking gas, reflecting a decline in benchmark rates. The price of natural gas from legacy fields allocated to state-owned ONGC without auction has been reduced from $6.75 to $6.41 per million British thermal units (mmBtu), according to a notification from the Oil Ministry's Petroleum Planning and Analysis Cell (PPAC). The reduction, which is the first since the government in April 2023 implemented a new formula to price such gas, will aid city gas retailers like Indraprastha Gas Ltd, Mahanagar Gas Ltd and Adani-Total Gas Ltd who had been reeling under cost pressures from rise in input cost. In April 2023, the Union Cabinet accepted an expert committee report to price on a monthly basis the gas from legacy fields, called APM gas, at 10 per cent of monthly average import price of crude oil with a floor of $4 and a cap of $6.5 per mmBtu. The cap price was to remain unchanged for two years and rise by $0.25 annually thereafter. In line with this, the cap rose to USD 6.75 per mmBtu in April. In the first two years, the price of gas using this formula ranged between USD 7.29 per mmBtu and USD 9.12 but the cap ensured that the rate were fixed at USD 6.50 per mmBtu. In April, the price according to this formula came to USD 7.26 per mmBtu but the final rate was USD 6.75 in line with higher cap. In May, the price came to USD 6.93 but was capped to USD 6.75 for consumers. Since there has been a fall in international oil prices in view of uncertain demand outlook, the Indian basket of crude oil averaged around USD 64 in May. Using this as a benchmark, the APM gas price came to USD 6.41 per mmBtu on gross calorific value (GCV) basis, according to PPAC. "For gas produced by Oil and Natural Gas Corporation/Oil India Ltd from their nomination fields, the APM price shall also be USD 6.41 per mmBtu on GCV basis" for the period June 1, 2025 to June 30, 2025, PPAC said. The fall in benchmark also means that the price of gas that ONGC produced from new wells in the APM fields would also come down. The government had allowed ONGC to charge 12 per cent of the oil price for the gas coming from new wells it drills. The higher price was to make up for the capex incurred in drilling new wells. As much as 5 million standard cubic meters per day of gas - or a 10th of all gas produced by ONGC - comes from new wells, according to industry sources. APM gas is one produced by state-owned firms Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) from fields that were given to them on nomination basis. This gas is the 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. Prior to April 2023, the price of gas produced from fields covered under the Administered Price Mechanism (APM) regime -- which accounts for 70 per cent of domestic gas production -- was determined semi-annually based on a formula that benchmarked it to average international prices at four gas trading hubs. APM gas is provided to city gas distributors for supply to CNG and residential PNG segments, which together accounts for 60 per cent of their sales volume. Subsequent to the April 2023 decision, APM gas prices are revised on a monthly basis but subject to ceiling and floor price. The ceiling price now is USD 6.75 per mmBtu and will rise by another USD 0.25 per mmBtu in April next year. APM gas prices had seen wide 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 ended March 2023. The rate for difficult fields like KG-D6 of Reliance Industries has been set at USD 10.04 per mmBtu for six months beginning April 1 as compared to USD 10.16 in the preceding six months period, according to PPAC.
Time of India
2 days ago
- Business
- Time of India
Domestic gas price drops to two-year low of $6.41/mmbtu, first time below ceiling
New Delhi: The domestic natural gas price has dropped to a two-year low of $6.41 per million British thermal units (mmbtu) for June, delivering a major boost to city gas companies and other users of price-regulated fuel. Cooking and transportation costs could ease if city gas distributors choose to pass on some of the benefit to end consumers. The price of domestic gas—also known as the Administered Price Mechanism (APM) price—is set monthly by the government based on the average crude oil price in the preceding month. A recent decline in crude prices has brought the June gas price down to $6.41 per mmbtu from $6.93 in May, according to a government notification. The effective price in May was $6.50, the ceiling for domestic gas. For the first time since the current pricing formula was introduced in April 2023, the domestic gas price has fallen below the ceiling, thanks to a sharp drop in crude oil prices. Over the past two years, elevated crude prices had made the ceiling the effective market price each month. The average Indian crude basket price in May was $64.05 per barrel, down from $67.73 in April. Lower crude prices will also reduce the cost of 'new well' gas for city gas distributors. Priced at 12% of the crude oil rate, new well gas constitutes a significant portion of their input costs.
Time of India
3 days ago
- Business
- Time of India
Domestic gas price drops to two-year low of $6.41/mmbtu, first time below ceiling
New Delhi: The domestic natural gas price has dropped to a two-year low of $6.41 per million British thermal units (mmbtu) for June, delivering a major boost to city gas companies and other users of price-regulated fuel. Cooking and transportation costs could ease if city gas distributors choose to pass on some of the benefit to end consumers. The price of domestic gas—also known as the Administered Price Mechanism (APM) price—is set monthly by the government based on the average crude oil price in the preceding month. A recent decline in crude prices has brought the June gas price down to $6.41 per mmbtu from $6.93 in May, according to a government notification. The effective price in May was $6.50, the ceiling for domestic gas. For the first time since the current pricing formula was introduced in April 2023, the domestic gas price has fallen below the ceiling, thanks to a sharp drop in crude oil prices. Over the past two years, elevated crude prices had made the ceiling the effective market price each month. The average Indian crude basket price in May was $64.05 per barrel, down from $67.73 in April. Lower crude prices will also reduce the cost of 'new well' gas for city gas distributors. Priced at 12% of the crude oil rate, new well gas constitutes a significant portion of their input costs. Live Events Economic Times WhatsApp channel )
&w=3840&q=100)
Business Standard
06-05-2025
- Business
- Business Standard
Mahanagar Gas Q4 results: Profit dips 4.8% on rising costs, higher volumes
Indian city gas distributor Mahanagar Gas posted a 4.8 per cent fall in quarterly profit on Tuesday, as expenses cut into steady growth in volumes. The state-backed natural gas distributor reported a profit after tax of 2.52 billion rupees ($29.9 million) for the quarter ended March 31, down from 2.65 billion a year earlier. Revenue from operations grew 18.6 per cent to 20.39 billion, while total expenses rose 24.2 per cent. KEY CONTEXT Indian city gas companies like Mahanagar Gas, Indraprastha Gas and Gujarat Gas have been facing earnings pressure for the last couple of quarters due to reduced supply of cheaper, government-regulated APM (Administered Price Mechanism) gas. This has forced them to buy more expensive gas from the open market, squeezing their profit margins. Mahanagar Gas, however, posted a 12.3 per cent rise in total sales volumes, driven primarily by strong growth in its compressed natural gas segment. Peer Indraprastha Gas reported a 9 per cent fall in its quarterly profit from a year ago, hurt by higher expenses.
