The government on Thursday hiked by 62 per cent, the price of natural gas that is used in households for cooking and is turned into CNG for use as fuel in automobiles.
The increase in gas prices is likely to result in a 10-11 per cent rise in CNG and piped cooking gas rates in cities such as Delhi and Mumbai, industry sources said.
It will also lead to a rise in cost of power generation, but consumers may not feel any major pinch as the share of power produced from gas is very low.
This is the first increase in rates since April 2019 and comes on back of firming benchmark international prices but does not reflect the spurt in spot or current price of liquefied natural gas (LNG) witnessed during the last couple of weeks.
The Petroleum Ministry's Petroleum Planning and Analysis Cell (PPAC) said the rates paid for gas produced from fields given to state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) will be $2.90 per million British thermal unit (mmBtu) for the six-month period beginning October 1, 2021.
Simultaneously, the price for gas produced from difficult fields such as deep sea, which is based on a different formula, was hiked to $6.13 per mmBtu from the current $3.62 per mmBtu.
Gas prices were last raised in April 2019 and have since only fallen due to a drop in global benchmark rates.
Natural gas price is set every six months - on April 1 and October 1 - each year based on rates prevalent in surplus nations such as the US, Canada and Russia in one year with a lag of one quarter.