With the domestic natural gas price announced in October expiring on Tuesday, the government announced the new rate, effective April 1, at $4.66 a unit -- lowering it by 8 percent from the existing $5.61 owing to lower international prices.
"In accordance with Para 8 of the 'New Domestic Natural Gas Pricing Guidelines, 2014' issued by the ministry of petroleum and natural gas, government of India, the price of domestic natural gas for the period April 1, 2015 to September 30, 2015 is given hereunder: $4.66 per mmBtu on GCV basis," the Petroleum Pricing and Analysis Cell (PPAC) said in a statement.
The price of $4.66 per million British thermal unit is on gross calorific value basis (GCV) as opposed to $5.05 per mmBtu currently. On net calorific value (NCV) basis, the rate would be $5.18.
The cut reflects the reduced international hub prices. International crude oil prices have also fallen to record low over last year, before recovering somewhat over the last couple of months.
Gas price is to be revised every six months using weighted average or rates prevalent in the hubs of US, Mexico, Canada and Russia.
The government in October 2014 announced an upward revision to $5.61 per unit against the industry's demand for at least doubling it to a little over $8 per unit, as per the Rangarajan panel recommendations.
However, accepting the Rangarajan panel recommendations would have meant a gas price of $8.4 per unit, instead of $5.6 effective from November 2014 for five months.
As per the mechanism approved in October 2014, the new price of $5.61 per unit applied for normal categories of gas.
But for all new discoveries in ultra-deep-water areas, deep-water areas and the high pressure-high-temperature areas, it said that a premium will be given but did not spell out further details on how it will be calculated.
While shallow-water blocks are at a depth of up to 100-500 metres, deep-water blocks descend to around 1,000 metres. Those at depths beyond 1,500 metres are classified as ultra-deep-water blocks.
Reliance Industries will not immediately be able to avail the new price as it remains locked in an arbitration with the government over alleged shortfall in production from its Krishna-Godavari basin fields.