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 increase in CNG prices that had become necessary after doubling of natural gas prices.

Indraprastha Gas Ltd in Delhi and Mahanagar Gas Ltd in Mumbai were to raise the prices 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 petroleum ministry yesterday morning, asking them to defer the decision till June 15, a source privy to the communique said.

Following the “verbal” order, the two companies did not go ahead with their planned price increase from today.

The petroleum ministry had in a May 31 written order, detailing decision of the Cabinet to increase natural gas prices to $4.2 per mBtu, stated that IGL and MGL could raise CNG and piped gas prices from June 8.

The CNG price increase 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 sync with the cost.

However, when it became clear that key members 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 decision to increase CNG prices, 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 prices 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 increase from June 8,” the source said.

The decision to raise natural gas prices from Rs 3.2 per cubic metre to Rs 7.5 per cubic metre ($4.2 per mBtu) 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 prices were to be raised from Rs 15.92 per cubic metre to Rs 16.85 per cubic metre.

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