Determination of marketing margin for supply of domestic gas to urea and LPG producers

No: --- Dated: Nov, 18 2015

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for determination of marketing margin for supply of domestic gas to urea and LPG producers. 

This decision is a structural reform. Marketing Margin is the charge levied by gas marketing company on its consumers over and above the cost or basic price of gas for taking on the additional risk and cost associated with marketing gas. Currently, different transporters are charging different marketing margins for supply of natural gas. With this decision, there would be uniformity in the marketing margin on domestic gas charged by gas marketers for the regulated sectors, namely, Urea and LPG. There would be a reduction in marketing margin paid by Urea and LPG producers as a result of this decision. 

Further, the rate would be fixed on non-discretionary basis. The issue of vast disparity in marketing margins was looked into by the Petroleum & Natural Gas Regulatory Board (PNGRB) and the marketing margin finalized today is based on the recommendations of PNGRB. Future escalations in the marketing margin upto Wholesale Price Index (WPI) would be decided by the Ministry of Petroleum & Natural Gas itself. 

This decision is likely to enhance transparency and provide an element of certainty for future investments in gas infrastructure sector