The Government of India on March 31, 2025 raised by 4% the price of natural gas produced from old legacy fields called APM – the key input used to make CNG and produce electricity and product fertiliser.
- This is the first increase in the APM gas price in two years and in accordance with the roadmap that was laid out by the government.
APM Gas Pricing Mechanism:
- Governed by the Administered Price Mechanism (APM), where the government sets gas prices instead of market-based pricing.
- In April 2023, India linked APM gas prices to 10% of the monthly average import price of crude oil, with a floor price of $4 per mmBtu and a cap of $6.5 per mmBtu.
- As of March 31, 2025, the price cap has increased to $6.75 per mmBtu.
Producers & Usage:
- Produced mainly by ONGC and Oil India Ltd (OIL) from fields allocated on a nomination basis.
- APM gas is used in:
- Compressed Natural Gas (CNG) for vehicles
- Piped Natural Gas (PNG) for households
- Fertilizer production
- Electricity generation
Historical Price Volatility:
- Prices fluctuated widely before the April 2023 pricing reform:
- 2021: As low as $1.79 per mmBtu
- March 2023: Peaked at $8.57 per mmBtu
- New system ensures monthly revisions but within a fixed price range.
Impact on Consumers & Industry:
- The price hike may lead to higher CNG and PNG prices, affecting transportation costs and household expenses.
- Could also impact fertilizer and power production costs.
(Source: TH)
