Shares of most city gas distributors advanced after the government cut domestic gas price cut by 26% to $2.39 per MMBtu.
Meanwhile, the S&P BSE Sensex was down 641.72 points or 2.18% to 28,826.77.
Adani Gas, (up 1.33%), Gail (India) (up 0.98%) and Mahanagar Gas (up 0.31%) advanced.
Gujarat Gas (down 1.40%) and Indraprastha Gas (down 1.54%) declined.
The Ministry of Petroleum and Natural Gas has lowered the price of domestically produced natural gas to $2.39 per million British thermal unit (MMBtu). This price will be applicable from 1 April 2020 to 30 September 2020. The new price is 35.23% lower than the $3.69 MMBtu natural gas price for the 1 April 2019 to 30 September 2019 period. It is lower by 26% as compared to $3.23 MMBtu, the natural gas price for the 1 October 2019 to 31 March 2020 period.
The ceiling price allowed for gas to be produced from difficult fields has also been lowered to $5.61/MMBtu from $8.43/MMBtu during the 1 October 2019 to 31 March 2020 period.
Domestic natural gas price in the country is governed as per the New Domestic Gas policy, 2014 which instituted Administrative Price Mechanism (APM) in 2014 for finding the prices of domestic gas. APM is linked to the 12-month averages of the US, Canada, Russia and Europe prices.
Reduction in natural gas prices in India, in line with global prices, is expected to boost the business of city gas distributors (CGDs), besides driving gas consumption in the domestic market.
With reduction in natural gas prices, compressed natural gas (CNG), which is consumed by vehicles in large amounts, will come cheaper. The customers of piped natural gas (PNG), which is used for cooking purposes, will be able to cut their household expenditure because of the reduction in prices.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
