New Delhi: The government has allocated ₹1,200 crore for subsidizing the sale of natural gas under the administered price mechanism (APM) in North-eastern states for FY25.
In the previous budget, the allocation was ₹1,633 crore for FY24, under the head of “other subsidy payable including for North Eastern Region”. In FY23, the allocation was ₹811 crore.
On 15 January, Mint reported that the government may allocate up to ₹1,000 crore for the upcoming fiscal.
Launched in FY11, the scheme covers the sale of APM gas to customers in the North-eastern region by state-run oil and gas companies, ONGC and Oil India. Customers pay a subsidized price for the gas, currently around 60% of the APM price. The subsidized amount is later claimed by oil and gas companies on a monthly basis.
Customers of APM gas comprise city gas distribution (CGD) players, PNG operators, fertilizer companies and gas-based power generators.
The Centre has been encouraging the use of natural gas, considered a cleaner fuel than oil, and other forms of gas. In October 2023, the government launched the 12th round of bids for seven geographical areas in five states in the North-east and two Union territories—Jammu & Kashmir, and Ladakh.
Currently, there are just over 10 million PNG connections in the country, compared with over 300 million LPG connections. The government aims to provide around 125 million PNG connections across the country by 2030.
The Centre has set an ambitious target of increasing the share of gas in India’s energy mix to 15% by 2030 from the current 6%. So far, CGD networks have been authorized for 300 geographical areas, covering about 88% of the country’s area, and 98% of its population.
In a bid to boost gas adoption, the Union cabinet last April approved new guidelines for gas pricing following recommendations by the Kirit Parikh committee on natural gas pricing, paving the way for linking domestic natural gas prices to global crude prices. Following the change, the price of natural gas is calculated at 10% of the monthly average of the Indian crude basket, which is a weighted average of Dubai and Oman (sour) and Brent Crude (sweet) oil prices.
Under the new regime, a floor price as well as a ceiling price was introduced for operators to source gas from the legacy fields of oil and gas companies. That would shield the CGD operators from volatility in international prices. The upper and lower ceiling, respectively, are now at $4 per metric million British thermal unit (mmBtu) and $6.50 per mmBtu under the APM.
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Published: 01 Feb 2024, 02:08 PM IST