InvestorQ : What is the implication of the recent raising of gas prices?
Riya Dwivedi made post

What is the implication of the recent raising of gas prices?

shrinidhi Rajan answered.
1 month ago

The Indian government has announced that it would raise the price of locally produced gas. In the case of old oilfields the gas prices would be hiked by 40% to $8.57 per MMBTU (million metric British thermal units). Normally, the gas prices are announced for the next six months, so this new price would be applicable for the six months from October 2022 to March 2023. At the end of the 6 months, the prices would again be revised based on the international prices prevailing for gas, which is again a demand supply game based on crude.

However, it must be remembered that gas is an important input for sectors like fertilizers and power sector. Hence this is likely to spike the input costs of gas fired fertilizer manufacturers and power producers. Even the price of domestic cooking gas and piped gas is likely to go up post this hike in prices. At the same time, the ceiling price for gas from more challenging fields like the deep sea oil fields has been hiked from $9.92/MMBTU to $12.46/MMBTU. However, with inflation at 7%, this could add more price pressure.