By News Desk 
New Delhi | June 2, 2025: In a move that may soon lead to a reduction in prices of Compressed Natural Gas (CNG) used in vehicles and Piped Natural Gas (PNG) used in households, the Indian government has reduced the price of domestically produced natural gas for the first time in two years. The decision follows a consistent decline in global crude oil prices.
According to a notification issued by the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas, the price of natural gas allocated to public sector giant ONGC from legacy or older gas fields—without a competitive bidding process—has been cut from $6.75 to $6.41 per million British thermal units (MMBtu).
First Reduction Under the Revised APM Pricing Formula
This marks the first downward revision in natural gas prices since the government introduced a new pricing formula for Administered Price Mechanism (APM) gas in April 2023. The pricing reform was based on recommendations from a government-appointed expert panel and linked the domestic gas price to 10% of the average monthly import price of crude oil, with a price floor of $4 and a ceiling of $6.5 per MMBtu.
Under the revised model, the cap was to remain fixed for two years, with incremental increases of $0.25 per year thereafter. In line with this, the maximum price had reached $6.75 per MMBtu by April this year.
Impact on Urban Gas Distributors
This price cut comes as a major relief for city gas distribution companies like Indraprastha Gas Ltd, Mahanagar Gas Ltd, and Adani Total Gas Ltd, which have been under pressure due to elevated input costs. The lower production cost of natural gas is expected to ease the financial burden on these firms and may translate into reduced prices for end consumers in the coming weeks.
Crude Oil Prices Continue to Decline
The government’s move is influenced by the ongoing softness in global crude oil markets. On the last trading day of the previous week, WTI crude futures settled at $60.79 per barrel, down by 0.25% or $0.15, while Brent crude closed at $62.78 per barrel, marking a 0.90% or $0.57 decline.
Continued weakness in crude oil prices plays a critical role in determining the domestic pricing of natural gas, particularly under the revised formula adopted in 2023.
What This Means for Consumers
If the reduced gas prices are passed on, consumers can expect lower fuel bills in the coming months—especially in metropolitan areas where CNG and PNG are commonly used. With urban transportation, delivery services, and households relying heavily on natural gas, the decision is expected to provide much-needed relief amidst broader inflationary pressures.