Taking an important decision, the government has increased the price of natural gas produced from old fields falling under the administered price system (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 price of CNG may increase due to the increase in the price of APM gas. A notification by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum said that 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 public sector companies Oil and Natural Gas Corporation (ONGC) and Oil India Ltd. (OIL) from fields that were given to them on a nomination basis. The gas produced from these fields is used as raw material for piped cooking gas (PNG) as well as CNG for driving vehicles and fertilizers and for power generation. This is the first increase in the price of APM gas in two years. This is as per the government's outline.

The Union Cabinet, in April 2023, 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 set a minimum price of four dollars per million British thermal units (MMBTU) and a maximum limit of $6.5.

The government also changed the recommendation of an annual increase of $0.50 per unit until full regulation in 2027. The Cabinet decided that the rates would not be changed for two years and thereafter there would be an increase of $0.25 annually. The hike announced on Monday is in line with that decision.

The Petroleum Planning and Analysis Cell (PPAC) said that the price of APM gas for April 1 to April 30, 2025, should have been $7.26 per unit according to 10 percent indexation on the price of crude oil i.e. the effect of inflation. But this price was subject to the limit. 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 April 2023, the price of gas produced from the fields under the Administered Price Mechanism (APM) system was determined on a half-yearly basis based on a formula. This determination was made under the formula based on the average international prices at four gas trading centers. 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, APM gas prices are revised every month, but they are subject to maximum and minimum prices. The maximum price is now US$6.75 per unit.

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