New Delhi, Sept 30 (KNN) In a move that would benefit the domestic industry by cutting down its cost of production, the government today slashed natural gas prices by 16 per cent to USD 4.24 per unit for the six month period, beginning October 1.

The price would be valid for the next six months. The price of domestic natural gas is decided based on a formula approved by Modi-government in October last year, which is linked to global indices.

As per the mechanism approved in October 2014, price of domestically produced natural gas is to be revised every six months using weighted average or rates prevalent in gas-surplus economies of US/Mexico, Canada and Russia to incentivise exploration in deep-sea that wasn’t viable at USD 4.2 rate.

Indian gas prices are calculated by taking weighted average price at Henry Hub of the US, National Balancing Point of the UK, rates in Alberta (Canada) and Russia with a lag of one quarter.
 
The October 1, 2015 to March 31, 2016 rate will be based on average of prices during July 1, 2014 to June 30, 2015.

The current price of USD 5.61 per mmBtu is already among the lowest in Asia Pacific. China pays explorers USD 11.9 per mmBtu rate for new projects while Indonesia and the Philippines prices the fuel at USD 11 and USD 10.5, respectively. (KNN Bureau)