India more than doubles price of locally produced gas

The Petroleum Planning and Analysis Cell of the federal oil ministry announced the new prices today.

This will raise the prices of gas sold to households, the power sector, industries and fertiliser firms, adding to overall inflation.

As per a notification issued by the oil ministry’s PPAC, the price of gas from regulated fields of state-owned Oil and Natural Gas Corp Ltd and Oil India Ltd will rise to a record $6.10 per million British thermal unit from the current $2.90.

The rate paid for difficult fields like deepwater will rise to $9.92 for April-September from $6.13 per mmBtu, the notification stated.

India links prices of locally produced gas from old fields to a formula tied to global benchmarks, including Henry Hub, Alberta gas, NBP and Russian gas.

High natural gas prices will boost earnings of producer ONGC, Oil India Ltd and Reliance Industries.

India’s annual retail inflation exceeded 6% for the second consecutive month in February.

Headline inflation could remain at elevated levels as fuel retailers from 21 March started a gradual increase in pump prices of gasoil and gasoline, after a gap of over four months, reflecting a spike in global prices.

DBS Bank says every $10 increase in the price of a barrel of oil lifts India’s consumer price index-based inflation by 20 to 25 basis points, widens the current account gap by 0.3% of GDP, and poses a downside risk of 15 basis points to growth.

With agency inputs