LPG Price: The government has taken a major decision to reduce the rising gas prices across the country. Now the government and oil companies are going to introduce a new gas pricing system across the country. This will give relief to the public. Along with this, gas prices will also come down. The country’s new gas pricing system will reduce the revenues of gas majors like ONGC and Indian Oil Limited (OIL).
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S&P Ratings has informed about this on Friday. However, the new regulations will not affect the price of gas produced from the difficult region. Companies like Reliance Industries Limited operate in such sectors.
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On April 6, the government announced these new guidelines. Under this, the government will fix the price of domestically produced gas on a monthly basis. This rate will be 10 percent of the price of Indian crude oil (the average price of crude oil imported by India) in the previous month.
The government has set a lower limit of US$4 per million British Thermal Unit (BTU) and an upper limit of US$6.5 per unit for gas prices. “We expect the new gas pricing norms to result in faster price corrections,” said Sruthi Jadakiya, credit analyst at S&P Global Ratings. Earlier, the price was reviewed every six months.
S&P said in a statement that ONGC could get a price of at least USD 4 per unit of its gas production in the lower price range. International natural gas prices are at record lows, but the same price. Similarly, higher range of prices will limit revenue growth for ONGC. This is especially true in the midst of rising prices.
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