India relies on imported gas for about 50% of its production . Domestic gas is mostly used for CNG and PNG applications as well as fertiliser units .
NEW DELHI: CNG and PNG will be more costly, and input cost for fertiliser producers will increase sharply, as prices of natural gas extracted from domestic fields will rise 50% to new heights if the government decides to carry out the proposed reform on October 1 despite a commission adjusting the price structure to maintain consumer rates.Following the Russia-Ukraine war, the global gas prices would escalate from $6.1 a unit to $9 a unit (million British thermal unit).Gas prices in technologically challenging areas, which also enjoy marketing freedom, will increase from $9.9 per unit to $12 per unit.Shortly after the war, global spot market rates reached $65 per unit, up 4-5 times higher than normal.As a result of the recent decline in oil prices, the prices have dropped into the $40s, which would be realized only after six months if the system is kept unchanged.India relies on imported gas for about 50% of its production.The 2014 formula was then applied to a six-month rolling average of rates in major markets such as the United States, Canada, and the FSU (former Soviet Union) countries.All of them are gas surplus markets. For energy production, a small amount is utilized.These are the users who will be hardest affected by this.Operators of CNG and PNG would be in a sluggish position if gas was consumed at a lower cost.The rupees drop will further intensify the pinch. This could jeopardize the economics of an estimated Rs 80,000 crore investment to implement city gas projects in 400 districts across the region.