Revised Domestic Gas Pricing Guidelines Approved by Union Cabinet
Revised Domestic Gas Pricing Guidelines: The revised Domestic Gas Pricing Guidelines are the updated guidelines for determining the prices of domestic gas in India. Revised Domestic Gas Pricing Guidelines are important for UPSC Prelims 2023 and UPSC Mains Exam (GS Paper 2- Various government policies to promote sustainable energy infrastructure in India).
Recently, Revised guidelines for pricing of domestically produced natural gas from specific nomination fields have been approved by the Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi.
The approved revised domestic natural gas pricing guidelines are applicable to the nomination fields of ONGC/OIL, NELP blocks, and pre-NELP blocks, where the prices are subject to the Government’s approval as per the Production Sharing Contract (PSC).
At present, the pricing of domestic gas is determined according to the Domestic Gas Pricing Guidelines of 2014, which received Government approval in the same year.
The revision and reform of the earlier gas pricing guidelines was deemed necessary due to their high volatility and significant time lag based on four gas hubs.
The revised guidelines aim to establish a consistent pricing system for domestic gas consumers while also offering incentives to producers to boost production and safeguard against market volatility.
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The revised Domestic Gas Pricing Guidelines are the updated guidelines for determining the prices of domestic gas in India.
The revised guidelines make prices linked to crude, which is a more relevant practice in the industry contracts, and has deeper liquidity in global trading markets, on a real-time basis. The data of Indian Crude basket price from the previous month will form the basis for APM gas price determination. Additionally, gas produced from new wells or well interventions in the nomination fields of ONGC & OIL, would be allowed a premium of 20% over the APM price.
The earlier guidelines were based on the volume-weighted prices prevailing at four gas trading hubs with a time lag of a quarter, which caused significant time lag and high volatility. The revised guidelines aim to address these issues and provide a more stable and relevant pricing regime.
The revised guidelines are expected to promote the growth of the gas-based economy in India and reduce the carbon footprint. The reduced prices of Piped Natural Gas (PNG) for households and Compressed Natural Gas (CNG) for transport will also lower the fertilizer subsidy burden and help the domestic power sector.
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