Indian Gov’t Announces Doubling In Price Of Natural Gas, To Start April 2014

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Natural Gas Rally
Oil and gas pipes.

The Indian government on Friday announced a doubling in the government-fixed price of natural gas, set to take effect in April 2014, reports the BBC.

The price hike could increase investment by natural gas and energy companies, according to Indian domestic gas producers, but it could also hurt consumers.

The costs of electricity, transport fuel and cooking gas are likely to be affected by the hike.

India’s Cabinet Committee on Economic Affairs said the price of domestically made natural gas should become $8 per unit, up from the current $4.20.

That hike is even more than expected, said T.K. Ananth Kumar, finance director at the state’s Oil India (NSE:OIL), to the BBC. “This is really positive,” he said. “It will encourage us to invest more in exploration.”

Shares of India’s gas producers rose significantly in trading.

The hike will “incentivize investment” in the Indian energy sector, allowing optimal production levels and addressing some of the huge unmet demand for natural gas, said the Indian government.

Demand for gas in India exceeds supply, with coal and oil currently dominating India’s energy use. The Indian government wants to double the use of natural gas to 20 percent of the energy market by 2020.

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