LPG PRICING MECHANISM
administered pricing mechanism
LPG & other gas pricing mechanism in india.
Gas prices in india are divided into 2 parts.they are,
- Price from old gas fields known as legacy or old fields, which are mostly run by government owned oil companies as Oil & natural gas commission ONGC & Oil india limited (OIL) &
- Price for new gas fields that are difficult also known as difficult fields.
How are the rates fixed?
Who fixes the price & how often?
The government bi-annually fixes prices of natural gasproduced in the country -- which is converted into CNG for use in automobiles, piped to household kitchens for cooking and used to generate electricity and make fertilisers.
At present the locally produced gas is priced at rates of gas in gas surplus nations.
What was kirit parekh committee?
Kirit parekh committee was constituted by the government to suggest ways to fix prices of locally produced gas that helps safeguard the interests of producers & consumers. India is aiming to become a gas based economy by 2030 with gas component rising from current 6.3% to 15%.
What is administered price mechanism(APM) in fuel pricing in india?
Govt. controlled prices with caps in lower and upper end to insulate consumers from excessive volatility.
In india 2/3rd of all gas produced comes from legacy or old fields production & goes into APM. APM will be fully deregulated in 2027. APM gas fields were allotted to ONGC & OIL before 1999 & they do not share their profit with government & pricing is based on hose prevailing in international oil hubs or those countries which have surplus gas production.
34% of all APM gas is allotted to power sector, 17% to the fertilizer industry & 22% to city gas supplies.
Difficult field gas prices are not affected by APM.