GAIL hikes natural gas prices by 18%; CNG, PNG to get dearer, Auto News, ET Auto
The price of natural gas supplied by state-run GAIL to city gas companies has jumped 18% to $10.5 per mmBtu in monthly revision from Monday. This is three-and-half times that of the rate city gas companies paid for domestic supplies at March-end and nearly six times that of last August.
GAIL supplies the gas, a blend of domestic and imported LNG, at a uniform rate to city gas companies, which are expected to pass on the increase to consumers of CNG and piped kitchen fuel. Green Gas Ltd raised CNG rates Monday by ₹5.3 per kg in Lucknow to ₹96.10 per kg.
Lower taxes as well as traditionally cheaper domestic natural gas had helped keep CNG rates lower compared to heavily taxed petrol and diesel for years in the country. But rising gas prices are threatening to derail the math: in a year CNG prices have risen 74% in Delhi and 62% in Mumbai and are expected to rise further.
Dearer CNG could slow down new gas-powered car sales that have set new records in recent years and hurt the pace of conversion from petrol and diesel vehicles, some city gas executives have warned. “While there is an artificial lid on petrol prices, CNG prices are steadily rising, which may soon help close the gap between the fuels,” an executive said.
Domestic natural gas price, determined by a government-set formula linked to average rates at international hubs, was $1.79 per mmBtu last August. It rose to $2.9 last October and $6.1 this April. Since domestic output wasn’t enough to meet the growing demand by city gas players, the government directed GAIL to import gas to meet the shortfall. City gas companies’ entire requirement is now being met by GAIL but the price charged is the blend of domestic and imported gas. The blended rate, which varies every month based on the cost of imported gas, has risen from $8.9 in July to $10.5 in August.