Domestic natural gas price could come down by 8-9 per cent for the six months from April to September 2015, on the back of weak international prices. But, whether this will be passed on to the end consumers will dependent on user companies.

The Ministry for Petroleum & Natural Gas is expected to announce the new price soon.

The gas price was revised on November 1 to $5.05 a unit (gas is measured in million British thermal units) on a gross calorific value basis. To this will be added local levies, transmission tariff, marketing margins, among other components, before the end consumer gets it. This price will be applicable till the end of March 2015.

The new price will be effective from April 1, 2015. The new price based on the formula that was cleared by the Cabinet Committee in Economic Affairs in October 2014 is likely to be around $5 a unit.

For the power sector, industry officials said every dollar increase or decrease in prices of natural gas would result in a 50 paise/unit increase or decrease in the cost of power generation from gas-based power plants. While for piped natural gas (for households and industrial users) and compressed natural gas (transport) it will depend on the management of the companies. If the CNG price advantage is not passed on to the customers then for companies like Indraprastha Gas Ltd it will mean a benefit of ₹1.4 a kg.

“Volume off-take from the CNG /PNG segment is expected to remain weak, given the saturated and weak market. We expect a volume growth of 3.1 per cent on a CAGR basis over fiscal year 2016 and 2017 in CNG and PNG,” said Dhaval Joshi, Research Analyst, Emkay Global.

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