New gas price policy positive for city gas distributors, oil producers

Market analysts are somewhat divided on the CGD companies and on OIL and ONGC

The gas pricing policy has seen crucial changes at the behest of the Kirit Parikh Committee’s recommendation. The administered price mechanism (APM) for domestic gas will be priced at 10 per cent of the price of India’s crude basket but with a cap of $6.5 per Metric Million British Thermal Unit (mmBtu) and a floor of $4. The price band will be gradually hiked at 0.25/mmBtu per year after keeping it stable for two years.

Prices will be adjusted every month, according to formula within the band. 

While this lowers the price from the prevailing $8.6/mmbtu, it will also not be revised