CNG price rise deferred on govt diktat

The government has asked CNG retailers in the national capital and Mumbai to defer by a week the hike in CNG price that had become necessary following doubling of natural gas price.

Indraprastha Gas in Delhi and Mahanagar Gas in Mumbai were to hike price of CNG they sell to automobiles by 25 per cent and that of gas piped to households for cooking purposes by close to 6 per cent from today.

The two companies received calls from the Oil Ministry yesterday morning asking them to defer the decision till June 15, a source privy to the comminique said.

Following the "verbal" order, the two firms did not go ahead with their planned price increase from today.

The Oil Ministry had in a May 31 written order detailing decision of the Cabinet to increase natural gas price to $4.2 per mmBtu, had stated that IGL and MGL can hike CNG and piped gas prices from June 8.

The CNG price hike was to coincide with a planned increase in petrol and diesel rates from June 8.

The source said yesterday's diktat came hours before an Empowered Group of Ministers (EGoM) was to meet on raising petrol and diesel prices in sink with cost.

However, when it became clear that key constituents like Railway Minister Mamata Banerjee and Agriculture Minister Sharad Pawar would not be attending the EGoM meeting and a decision would be taken, the oil ministry pressed IGL and MGL to defer the CNG price hike decision, he said.

The EGoM is to meet again in a week to 10 days time to consider freeing auto fuel prices from government control, a move that will result in petrol prices going up by Rs 3.35 a litre and diesel rates by Rs 3.49 per litre.

"While the decision to raise natural gas price came into effect from June 1, the oil ministry on purpose had stated in the order that city gas suppliers (like IGL) should effect any hike from June 8," the source said.

The government decision to raise natural gas prices from Rs 3.2 per cubic metre to Rs 7.5 per cubic metre ($4.2 per million British thermal unit) would have resulted in CNG price in Delhi going up by Rs 5.60 per kg to Rs 27.50 a kg. Piped natural gas price was to be raised from Rs 15.92 per cubic metre to Rs 16.85 per cubic metre.

The CNG rate hike would have narrowed the price advantage the environment friendly fuel had over petrol and diesel and it was felt that the this would be coupled with a price hike in conventional transport fuels, the source added.