<p>The n<a href="https://www.deccanherald.com/national/png-cng-to-get-cheaper-as-govt-revises-pricing-formula-1207329.html" target="_blank">ew pricing norms, which was approved by the union cabinet on Thursday</a>, are likely to make piped natural gas (PNG) and compressed natural gas (CNG) cheaper by 9 to 11 per cent, CRISIL Ratings said on Friday. </p>.<p>The administered price mechanism (APM) formula is now revised and determined as a 10 per cent slope to crude oil prices, but with a floor and ceiling price of $4 per million British thermal unit (mmBtu) and $6.5/mmBtu, respectively. During the month of March 2023, the average crude price stood at $78 per barrel. On the basis of this, the ceiling price of gas will be $6.5/mmBtu. </p>.<p>“APM prices declining to $6.5/mmBtu could mean a 9-11 per cent cut in CNG and PNG prices, assuming companies pass on the benefit to end-consumers,” said Naveen Vaidyanathan, Director, CRISIL Ratings.</p>.<p>In contrast, as per the earlier APM regime, gas prices could have risen further to $10-11/mmBtu for the first half of fiscal 2024 from $8.57/mmBtu for the six months ended March 2023, necessitating a price increase, Vaidyanathan added. The new gas pricing formula approved by the union cabinet is based on the recommendations of the Kirit Parikh Committee.</p>.<p>The panel, which submitted its report in November 2022, had recommended a floor price and a cap for gas from legacy and old fields. The government has largely accepted the recommendations.</p>.<p>Under the old mechanism, the price of gas produced from fields covered under the APM regime, which accounts for 70% of domestic gas production, was determined semi-annually based on a formula that benchmarks it to average international prices at four gas trading hubs. </p>.<p>APM gas prices have seen wide fluctuations over the years, from a low of $1.79/mmBtu in 2021 to a high of $8.57/mmBtu for the 6-month period ending March 2023. </p>
<p>The n<a href="https://www.deccanherald.com/national/png-cng-to-get-cheaper-as-govt-revises-pricing-formula-1207329.html" target="_blank">ew pricing norms, which was approved by the union cabinet on Thursday</a>, are likely to make piped natural gas (PNG) and compressed natural gas (CNG) cheaper by 9 to 11 per cent, CRISIL Ratings said on Friday. </p>.<p>The administered price mechanism (APM) formula is now revised and determined as a 10 per cent slope to crude oil prices, but with a floor and ceiling price of $4 per million British thermal unit (mmBtu) and $6.5/mmBtu, respectively. During the month of March 2023, the average crude price stood at $78 per barrel. On the basis of this, the ceiling price of gas will be $6.5/mmBtu. </p>.<p>“APM prices declining to $6.5/mmBtu could mean a 9-11 per cent cut in CNG and PNG prices, assuming companies pass on the benefit to end-consumers,” said Naveen Vaidyanathan, Director, CRISIL Ratings.</p>.<p>In contrast, as per the earlier APM regime, gas prices could have risen further to $10-11/mmBtu for the first half of fiscal 2024 from $8.57/mmBtu for the six months ended March 2023, necessitating a price increase, Vaidyanathan added. The new gas pricing formula approved by the union cabinet is based on the recommendations of the Kirit Parikh Committee.</p>.<p>The panel, which submitted its report in November 2022, had recommended a floor price and a cap for gas from legacy and old fields. The government has largely accepted the recommendations.</p>.<p>Under the old mechanism, the price of gas produced from fields covered under the APM regime, which accounts for 70% of domestic gas production, was determined semi-annually based on a formula that benchmarks it to average international prices at four gas trading hubs. </p>.<p>APM gas prices have seen wide fluctuations over the years, from a low of $1.79/mmBtu in 2021 to a high of $8.57/mmBtu for the 6-month period ending March 2023. </p>