In the first-ever reduction in domestic natural gas price, the rate will be cut by nine per cent to US $4.56 per million British thermal units (mmBtu) from April 1 to reflect the softening in international gas prices, with which it is benchmarked.
The decline in gas price will impact revenue of producers like state-run Oil and Natural Gas Corporation and Reliance Industries but will come as a shot in the arm for the power and fertiliser sectors, which primarily consume the gas.
Oil minister Dharmendra Pradhan refused to indicate the likely price but said, "If we are getting a cheaper price, it's good for the economy."
The government had on October 2014 fixed natural gas price at US $5.05 per mmBtu based on a weighted average of international hub rates estimated on the gross calorific value (GCV). The price of gas on GCV basis from April 1 will be US $4.56 per mmBtu, a senior official said. The price is based on a formula notified in 2014 by the new Prime Minister Narendra Modi-led NDA government.