The Union Cabinet on Thursday approved a new formula for pricing of natural gas and imposed cap or ceiling price to rein in runaway prices of CNG and piped cooking gas.

Natural gas produced from legacy or old fields, known as APM (Administered Price Mechanism) gas, would now be indexed to crude oil price instead of pricing it based on gas prices in surplus nations, such as the US, Canada and Russia, Union Information and Broadcasting Minister Anurag Thakur told reporters after a meeting of the Cabinet.

From April 1, APM gas will be priced at 10 per cent of the price of basket of crude oil that India imports (Indian basket of crude oil). The rate such arrived at however will be capped at $6.5 per million British thermal unit (mmbtu) as against current gas price of $8.57 per mmbtu. 

The price such arrived at would also have a floor of $4 per mmbtu. Rates would be decided every month instead of current practice of bi-annual revision, he said.