Adani Total Gas Limited (ATGL) has reduced the price of compressed natural gas (CNG) by up to ₹8.13 per kg and similarly the price of piped natural gas (PNG) by up to ₹5.06 per standard cubic metre, news agency ANI reported. The revised price will be in effect from 12 am on April 8.

This comes a day after the Cabinet announced new pricing mechanism for the bulk of domestically-produced natural gas by state run explorers. The new system of pricing is believed to reduced CNG, PNG costs.

The Cabinet decision was based on the recommendations of an expert panel headed by economist Kirit Parikh which proposed a floor of $4 per unit and cap of $6.5 for natural gas produced from old administered price mechanism (APM) fields operated by state run explorers – Oild and Natural Gas Corporation (ONGC) and Oil India Limited (OIL).

According to Crisil Ratings report, the revised mechanism will enable reducing CNG, PNG costs by around 9 to 11%, which would have otherwise risen if the previous regime had continued.

This revised gas pricing norms would lend greater stability to gas prices for city gas distributors and sustained competitiveness with alternative fuels, thus driving demand and supporting massive capex plans,” it said.

A subsidiary of Gail India, Mahanagar Gas Limited (MGL), has also announced a steep reduction in the retail price of CNG by ₹8 per kg and PNG by ₹5 per scm across its licenced area.