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Domestic Gas Prices to Plunge Low; Will it Create Anomaly Among Developers ?

 News

Natural gas prices in India may, from October 1, fall below USD 4.2 per unit, a rate that was used last year to devise a new pricing formula to incentivise domestic exploration. 

Source:  ET

SNP Insights

Expected declination of domestic gas price may create rays of optimism among gas consuming sector like power, fertilizer, CGD & transportation segment. Yet Pertaining to fact that domestic gas price is considerably lower compared to imported gas rate, further decreasing domestic price may deter upstream developer investment programme in India. At one end govt. of India is proposing to incentivise gas exploration from tough field to bolster domestic gas production while at the other end it is proposing to decline domestic gas rate. This conflicting regulation might create anomaly among developer regarding future regulatory scenario of the segment, which may act as a key deterrent for private participation in the sector.

Source: SNP Infra Research