Now your bills of piped domestic cooking gas (PNG) and auto fuel in compressed natural gas (CNG) are likely to go up from October 1 as the domestic natural gas price has risen over 16 per cent to $2.89 per mmBtu in line with international rates for the first time in three years.

This price revision came after falling in every six-monthly revision since the Government launched a formula-based pricing three years ago. Following the rise, it is expected that natural gas prices will put pressure on margins of the retail fuel distributors, fertiliser majors and power firms in some way or the other.

“In accordance with new domestic natural gas pricing guidelines 2014 issued by MoPNG, the price of domestic natural gas for the period 1 October 2017 to 31 March 2018 is $2.89 per mmBtu on Gross Calorific Value basis,” the Oil ministry's arm PPAC said in a notification.

The Government has also sharply raised the cap on premium price to $6.3 per mmBtu from $5.56 per mmBtu for the natural gas produced from difficult fields, it said in a notification. The rise is ostensibly in line with the rising benchmark reference rates in major global markets. According to experts, it will also somehow impact fertiliser and power firms as they import lNG (liquefied natural gas) in addition to buying the domestic gas, and pool the prices to calculate their overall costs. This may provide some cushion to their margins, as they would look to increase the mix of imported lNG, depending on its prices in the international open markets. As ONGC is the country's biggest gas producer, the gas production of State-owned gas major went up 10.13 per cent to 9,738 million standard cubic meter per day (mmscm) in the first five months of the current financial year.

For the full year 2017-18, the company expects its gas production to grow in double digits. As per Oil India (OIl), it expects its natural gas production to grow at around nine per cent by 2022. OIl's gas production grew at 0.35 per cent in the first five months current fiscal.

As for the premium price, gas producers are allowed to charge market-based prices within the specified cap for the gas produced at deep offshore fields or high-pressure high-temperature fields, which became operational January 2016 onwards.

The cap on this price was marginally hiked during the last revision for April-September 2017-18 to $5.56 mmBtu from $5.3 per mmBtu in the preceding half. Generally, the Government fixes price-based formula, linked to rates in some of the key gas markets across the globe.  The formula had raised the local prices by a third to $5.05/unit when it was introduced by the Modi-led NDA Government in October 2014 but in all subsequent revisions prices had been falling due to decline in international rates.