India announces gas price formula

NEW DELHI, October 22, 2014 – On Saturday, Narendra Modi’s government lifted diesel price controls and increased natural gas prices in a move to reduce the subsidy burden and boost energy investments.

The announcement comes as a surprise since the reform was not expected before mid-November.

From November 1, 2014 natural gas prices will be raised to $5.61 per million British thermal units, with the exception of Reliance Industries whose rate will be maintained at $4.2 per million British thermal units. The prices are to be reviewed every six months.

Public sector undertakings and gas producers ONGC and Oil India are set to benefit the most from this additional revenue, which shall further incentivise them to invest in their exploration and production operations.

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