Domestic Natural Gas Price Set to Reach Govt Cap in July

In July, India’s domestic natural gas price under the government’s administered pricing mechanism (APM) will reach its new maximum price of $6.75 per million British thermal units (mmbtu), up from $6.41/mmbtu in June. This is the first time since April that the price will be at the maximum price set by the government.

The APM price is updated monthly based on the average global crude oil prices, and the increase in prices in July is due to an increase in global crude oil prices, which are the benchmark for the domestic gas rate. The maximum APM price of $6.75/mmbtu was previously raised from $6.50/mmbtu in April as part of the government approved $0.25 yearly increment that was in place.

The changes will directly affect major consumers of APM gas such as city gas distributors, power plants, and fertiliser producers. It is expected that input prices will keep going higher and eventually will lead to higher prices for CNG, PNG, electricity and fertilisers; however, the decision of final pricing is still up to individual companies and regulatory approvals.

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Monthly revisions are part of the new pricing formula approved in 2023, and designed to give predictability around pricing, while also bringing domestic prices more in-line with the global energy market realities. The ceiling price is intended to balance between affordability for consumers with allowing for reasonable returns for gas producers.