With the oil ministry increasing the allocation of domestic natural gas to meet 100% of the requirement of compressed natural gas (CNG) and piped natural gas (PNG) retailers, cities ? including New Delhi and Ahmedabad ? will soon see a sharp fall in CNG and PNG prices. Supplies to CNG retailers have been increased by cutting about 1.9 mmscmd, or one-third of the domestic gas allocated to non-core users in the steel, oil refineries, and petrochemical sectors.
In Delhi, for example, city gas distributors (CGD) will cut CNG prices by R15 a kg and piped cooking gas by R5. CNG in Delhi currently costs R50.10 a kg and piped cooking gas R29.50 per standard cubic metre. CGD companies across the country will get 8.32 million metric standard cubic metres per day (mmscmd) of gas from ONGC and Oil India fields compared to 6.4 mmscmd currently.
?With domestic gas available at $4.2 per million British thermal units (mmBtu) as against imported LNG, which is three times costlier, the price of CNG in Delhi would be reduced by about R15 per kg (about 30%). There will also be a reduction of about R5 per cubic metre (about 20%) in the price of PNG,? said oil minister Veerappa Moily.
However, CNG and piped gas rates may rise in April if the government were to pass on the near-doubling of natural gas prices to consumers. The hike could be as high as R12 a kg for CNG in Delhi.
The government also withdrew its petition in the Supreme Court challenging the Bombay High Court order staying its guidelines on supply of natural gas and informed the court that it has revised the earlier policy. The Union government had decided in November to cut 20% of the supply of natural gas to Maharashtra and divert it to Gujarat.
Prices of CNG in Delhi were hiked by R4.50 last month to R50.10 a kg after retailers like Indraprastha Gas (IGL) were forced to buy a fifth of their gas (LNG) requirements from overseas. Oil secretary Vivek Rae said that the decision will take 2-3 days to take effect as gas firms will tie up and sign new supply agreements.
Delhi currently uses 28% of the costlier imported LNG. The decision will also benefit consumers in cities such as Meerut, Kanpur, Indore, Surat and Hyderabad. However, there will be no cut in rates in Mumbai, which gets all its gas requirements from domestic fields. Though all city gas entities in the country will get natural gas at uniform price, the rates of CNG and piped gas will vary from city to city depending on transportation charges and local sales tax or VAT.
