After increasing the quota of subsidised LPG cylinders from nine to 12 per household, the Petroleum and Natural Gas Ministry on Monday announced slashing of CNG prices by Rs. 15 per Kg (30 per cent) and piped natural gas (PNG) or cooking gas by Rs. 5 (20 per cent) per cubic metre across the country. The Aam Aadmi Party (AAP) Government had approached the Supreme Court last week to look into the CNG pricing structure.
Addressing a press conference, Petroleum and Natural Gas Minister, Veerappa Moily announced that allocation of domestic gas to CNG and PNG suppliers in cities like Delhi and Ahmedabad, which until now were partially dependent on expensive imported LNG, would now be fully met through domestic gas. Among the other major beneficiary cities would be Noida, Ghaziabad, Surat, Indore, Hyderabad, Agra, Lucknow, Mathura, Barauch, Vadodra, Kanpur, Faridabad, Gurgaon and Meerut to name a few. "All city gas entities in the country will get natural gas at uniform price. Rates of CNG and piped gas will however vary from city to city depending on transportation charges and local sales tax or VAT," Mr. Moily said.
Interestingly, the price of CNG was hiked in Delhi by Rs. 4.50 last month to Rs. 50.10 per Kg after retailers such as Indraprastha Gas Ltd (IGL) were forced to buy a fifth of their requirements in form of expensive LNG from overseas. In fact, following the hike in CNG prices, the auto rickshaw drivers had called for a big showdown this week and the AAP government had approached the Supreme Court for review of the CNG prices.
"The move will make both CNG and PNG cheaper for the people using CNG vehicles and also public transport. It will also provide relief to households that use PNG. Our target is the common man and we want to give the common man relief. In a way this is an anti-inflationary measure," Mr. Moily added.
With this, now gas will be available to retailers at $4.2 per mbtu as against imported LNG, which is three times costlier. Supplies to CNG retailers has been increased by cutting about 1.9 million standard cubic meters per day or one-third of the domestic gas allocated to non-core users in the steel, oil refineries and petrochemical sectors. CNG and PNG suppliers will get 8.32 mmscmd of gas from fields given to Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), as compared to 6.4 mmscmd presently. CNG in Delhi currently costs Rs. 50.10 per kg and piped cooking gas Rs. 29.50 per standard cubic metre.
Petroleum Secretary, Vivek Rae said orders to increase domestic gas supply to CNG entities were issued on Monday but the decision will take two-three days to take effect. There will be no cut in rates in Mumbai, which gets all its gas requirements from domestic fields. However, in Delhi, which presently uses as much as 28 per cent of the costlier, imported LNG, and cities in Gujarat such as Ahmedabad, which too were heavily reliant on imported fuel, will see a steep price cut.
However, officials in the Petroleum Ministry said the relief maybe short lived as the gas prices are set to be hiked by April 2014 and are likely to be almost double from $4.2 mbtu to around $8 to 8.4 mbtu.
Asked if the price cut was done with electoral gains in mind, Mr. Moily said, "The issue of supplying 100 per cent domestic gas to PNG and CNG entities was being debated for the past four years. It has nothing to do with elections. If it helps the common man, we are happy. If some political party also stands to benefit, it is incidental."
