April for the first half of the financial year 2022, as a result of the continuous hike in global prices, further fuelling inflation in Asia’s third largest economy. According to close sources familiar with the subject, India will increase the price of locally generated gas from old fields from $2.90 per million metric British thermal units (mmBtu) to a record high of $6.1 per million metric British thermal units (mmBtu) from April to September.
They noted that the ceiling price of the gas generated from more laborious fields will be increased to $9.92 per mmBtu from $6.13 per mmBtu for the April-September period. India compares the cost of domestically generated gas from old fields to a formula connected to worldwide benchmarks like Henry Hub, Alberta gas, NBP, and Russian gas.
The pricing will be based on the gross heat value. The oil ministry’s Petroleum Planning and Analysis Cell will reveal the new pricing on Thursday. Increased natural gas prices will benefit producers such as Oil and Natural Gas Corp, Oil India, and Reliance Industries. The decision will result in higher gas costs for consumers, the power sector, industries, and fertilizer firms, contributing to overall inflation.
In February, the annual retail inflation in India crossed 6% for the second consecutive month. Headline inflation might stay elevated as fuel merchants began gradually increasing gasoil and gasoline pump prices since March 21, following a four-month hiatus, in response to a worldwide price surge.
According to DBS Bank, every $10 hike in the cost of a barrel of oil increases inflation in India by 20 to 25 basis points, expands the current account gap by 0.3 percent of GDP, and creates a 15 basis point risk to growth.
