Inflationary pressures continue to hit households in the National Capital Region (NCR), with Indraprastha gas Limited (IGL) announcing a hike of Rs. 2 in the price of Compressed Natural Gas (CNG) on Friday.

IGL, the sole supplier of CNG to automobiles and piped natural gas (PNG) to households in the Capital, said CNG will cost Rs. 32 per Kg in Delhi from midnight tonight, as against Rs. 30 per Kg at present. Similarly, in neighbouring Noida, Greater Noida and Ghaziabad, CNG will cost Rs. 2.30 per Kg more - at Rs. 35.90 per Kg, IGL said in a statement here.

This is the fifth increase in CNG prices this year and follows the Rs. 3.14 per litre hike in petrol prices oil marketing companies (OMCs) from September 16.

The company defended the hike, saying it was forced to buy expensive imported LNG due to a drop in supplies from Reliance Industries Limited (RIL) Eastern offshore KG-D6 gas field.

The government has fixed the price of domestic gas produced by state-owned ONGC and RIL in U.S. dollar terms and every time the rupee depreciates against the dollar, users end up paying more. Gas from both RIL and ONGC is priced at $4.20 per million British thermal units.

IGL had contracted 0.308 million standard cubic metres per day of gas from RIL, but following a drop in KG-D6 output, supply has dropped to just 0.1 mmscmd. This has forced the company to buy more imported LNG, which is priced at over $17 per mmBtu. The company is buying some 0.3 mmscmd of imported LNG. "We are constrained to increase the price of CNG due to a major increase in the input cost of the entire pool of natural gas sourced by us as a result of recent steep appreciation of the dollar vis-à-vis the rupee and increased dependence on imported LNG," IGL managing director, Rajesh Vedvyas said in the statement.

"The base price of natural gas procured by IGL from all its sources - APM, KG–D6, long term R-LNG as well as spot R-LNG, is in dollars per mmBtu," the statement said. Mr. Vedvyas clarified that that this increase would have a minor impact on the per Km running cost of vehicles. For autos, the increase would be 6 paise per Km, for taxis, it would be 10 paise per Km and in the case of buses, the increase would be 57 paise per Km.

"Despite the aforesaid price increase, CNG would still offer over 65 per cent savings toward running costs when compared to petrol-driven vehicles at the current prices. When compared to diesel-driven vehicles, the economics in favour of CNG at a revised price would be over 22 per cent," the statement added.

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