After petrol, increase in CNG prices imminent

Days after a Rs 3 per litre rise in petrol prices, it is the turn of compressed natural gas. Indraprastha Gas (IGL), monopoly marketer of CNG in and around this metropolis, is looking at raising the price by up to six or seven per cent (Rs 2 per kg) sometime next week, due to higher cost on account of a weakening rupee.

This will be the fifth and the biggest raise in CNG prices over the past year. CNG sells at Rs 30 per kg in Delhi and Rs 33.60 in the National Capital Region. Once they do so, others such as Mahanagar Gas in Mumbai and Adani Gas in Ahmedabad may have to also consider a price revision, said an industry official.

IGL consumes close to 3.5 million standard cubic metres of gas per day. Around a fourth of this is met from imports, in the form of regasified-liquefied natural gas (RLNG). The rest comes from the domestic gas allocation of Reliance’s KG-D6 field and gas under the administered price mechanism of upstream companies such as Oil and Natural Gas Corporation.

Said the industry official of IGL and others such as Mahanagar Gas in Mumbai and Adani Gas in Ahmedabad. “Their costs have gone up sharply (owing to rupee depreciation) and players like IGL are in the process of announcing a hike that is expected to be in the range of Rs 1.50-2 per kg.” IGL caters to around 450,000 vehicles, including buses and auto rickshaws in Delhi and the NCR.

The pricing of the gas, both imported RLNG and the domestic gas, is done in dollars and these companies are paying more to purchase the same quantity.

The Indian currency has averaged around Rs 47.26 so far in September against the dollar, much higher than the Rs 44.42 in July and Rs 45.32 in August. The weakening rupee was also why oil marketers increased petrol prices by Rs 3 per litre to Rs 66.84 (Delhi) on September 15.

IGL had, on August 31, announced a sharp rise of around 15 per cent in the prices of piped natural gas (used for domestic cooking). So, another price rise on this score is not expected when CNG will be raised. CNG is considered a ‘greener’ and cheaper fuel.

Based on its current price in Delhi, running a vehicle on CNG is around 60 per cent cheaper than petrol and 28 per cent cheaper than diesel.