The Indian government has approved a doubling of the price of natural gas, a politically sensitive move that will take effect next year during elections.
It is hoped that the first increase in gas prices in three years will boost investment in this sector. Against this backdrop, shares of domestic gas producers in India rose sharply. The government's economic committee said the price of domestically produced natural gas should rise to $ 8 per unit from $ 4.20 in April next year.
Indian state-owned energy companies welcome the move and say they will increase investment in the industry and help raise money from outside. This is good news for importers of sawnwood and wood products.
Gas demand in India, the third largest economy in Asia, far exceeds production. However, the government has artificially lowered prices, and this has encouraged investment in developing productive capacities, including the construction of pipelines and terminals for the more expensive liquefied natural gas (LNG).
Coal and oil dominate India's energy sector at the moment, with coal accounting for 56 percent and oil 26 percent. The Indian government plans to double the share of natural gas to 20 percent by 2020.
However, the rise in prices is unlikely to be popular with voters. The Communist Party of India described the rise in prices as a "catastrophe" that would lead to faster inflation and higher costs for farmers. The government is believed to have succumbed to "pressure" from the corporate sector.
