The rate will be capped at the ceiling price of $6.75: Petroleum Planning and Analysis Cell (PPAC)
NEW DELHI: With a surge in oil prices triggered by Israel’s military strike on Iran, the price of natural gas used for producing CNG for vehicles and cooking gas was raised 5 per cent for July. As part of the monthly revision, the price of natural gas from legacy fields operated by state-owned companies was increased to $6.75 per million British thermal units, up from $6.41, according to the oil ministry’s notification.
US dollar 6.75 per mmBtu is the ceiling price for gas from legacy fields, known as APM gas, which accounts for roughly half the input used in producing CNG. It is also utilised in power generation, fertiliser production, and piped directly to households for cooking. A higher input gas price would squeeze margins of city gas retailers. City gas retailers may choose to hike CNG prices if the increase pinches them.
Administered price mechanism or APM gas price is revised on the first of every month, set at 10 per cent of the average import price of crude oil in the preceding month. But this price is subject to a floor or minimum rate and a ceiling or maximum rate. The ceiling price for 2025-26 is USD 6.75.
According to the Petroleum Planning and Analysis Cell (PPAC) under the ministry, the price of APM gas for the period from July 1 to July 31, 2025, was calculated at $6.89 per mmBtu on a gross calorific value (GCV) basis. However, the rate will be capped at the ceiling price of $6.75.
In the last revision effective June 1, the APM gas price was cut for the first time in two years, dropping to $6.41 per mmBtu from $6.75 in the previous month. This was the first reduction since the government in April 2023 implemented a new formula to price APM gas.
In April 2023, the Union Cabinet accepted an expert panel report to price on a monthly basis the gas from legacy fields, at 10 percent of monthly average import price of crude oil with a floor of $4 and a cap of $6.5 per mmBtu. The cap price was to remain unchanged for two years and rise by USD 0.25 annually thereafter. In line with this, the cap rose to USD 6.75 per mmBtu in April 2025.
