NewDelhi - According to sources, the Cabinet Committee on Economic Affairs in India is likely to approve the recommendations made by the Kirit Parikh Committee on Natural Gas Pricing. The committee was formed by the government to review the pricing formula for gas produced in the country.

Key Recommendations of the Kirit Parikh Committee

The committee has recommended complete liberalization of natural gas prices by January 1, 2027. The report submitted in November last year proposed a floor price and a cap for gas from legacy and old fields which make up two-thirds of all natural gas produced in the country. If these recommendations are accepted, gas prices could see a downward revision, which would be positive for consumers and producers. It would also imply a lower subsidy burden on the government for the fertiliser sector.

Recent Amendments to Gas Tariff Mechanism

The Petroleum and Natural Gas Regulatory Board (PNGRB) has recently amended regulations governing the tariff mechanism for natural gas transmission pipelines from April 1, 2023. The new regulations announced a uniform tariff of Rs 73.93 per metric million British thermal units (MMBtu) and increased the number of tariff zones from two to three.

Government Target to Increase Natural Gas Share in Energy Mix

In September last year, the Indian government announced its target to increase the share of natural gas in the energy mix to 15% by 2030, from the current 6.3%.
Implications of Cabinet Approval.

If the Cabinet approves the Kirit Parikh Committee's recommendations on natural gas pricing, it would have significant implications for the oil and gas sector in India. It would help improve the affordability and availability of natural gas and encourage investment in the sector. This, in turn, could benefit industries such as power generation, fertilizers, and steel. The decision of the Cabinet on this matter is eagerly awaited.