Spot prices of liquefied natural gas (LNG) have fallen sharply to $1.3 per unit, which has serious implications for India because it will be difficult to sell the fuel to factories as supplies under long-term contracts have a much higher rate of $5-7.
Industry fears a flood of disputes and litigation as factories are already struggling with very weak demand because of the lockdown.
LNG rates have been under pressure for more than a year due to a supply glut but the extraordinary demand destruction by the coronavirus pandemic and the difficulty in storing the super-cooled liquid has hammered global gas prices like never before.
International gas prices, a variable in the domestic price, have also been falling. Domestic prices fell 26% in the last six-monthly revision on April 1 to $2.39 based on the government-set formula.