CNG prices in Mumbai and several other cities across India have been significantly hiked by Rs 2 per kg, marking a substantial increase in fuel costs for commuters and households relying on CNG-powered vehicles and gas for cooking. However, users in Delhi, which is scheduled to hold elections soon, have been spared the price increase for the time being, according to city gas companies. This decision has drawn attention, as it follows a pattern seen in previous election cycles, where price hikes are often delayed until after elections have concluded.
Indraprastha Gas Ltd (IGL), the primary supplier of CNG in Delhi, and a major provider of piped natural gas (PNG) for households, raised its prices by Rs 2 per kg over the weekend, though the increase did not affect Delhi immediately. This move contrasts with recent trends, as CNG rates in Delhi have remained relatively stable. As of the latest update, the retail price of CNG in Delhi stands at Rs 75.09 per kg, with no immediate changes. However, just across the border, in cities like Noida, Greater Noida, and Ghaziabad, the price of CNG has risen to Rs 81.70 per kg. Additionally, Gurugram, another key area in the National Capital Region (NCR), has seen the price jump to Rs 82.12 per kg.
The situation is different in Mumbai, where Mahanagar Gas Ltd (MGL), the city gas retailer, implemented a price hike of Rs 2 per kg, taking the price of CNG to Rs 77 per kg as of November 22. This increase followed the conclusion of Maharashtra’s assembly elections. Notably, both MGL and other city gas retailers like Adani Total Gas Ltd had held off raising prices for two months, despite a significant 20% increase in their input costs, largely due to challenges faced in securing sufficient natural gas supplies.
The reason behind these price hikes lies in the ongoing supply constraints. Natural gas, which is converted into CNG for automobiles, is primarily sourced from ONGC's domestic fields, known as APM (Administered Price Mechanism) gas. However, supplies from these fields have not kept pace with the growing demand for CNG, and as a result, city gas retailers have faced difficulties. Since mid-September, there have been two cuts in supplies from these domestic sources. This shortage has forced companies to buy more expensive non-APM gas or costly imported liquefied natural gas (LNG), which is significantly more expensive than domestically sourced gas. As a result, retailers have had to raise prices to accommodate the higher procurement costs.
It's also worth noting that CNG prices are subject to regional variations due to local taxes such as VAT (Value Added Tax), which differ from state to state. This means that while the base cost of CNG may be similar across many regions, the final retail price can vary depending on the taxes imposed by state governments. In the case of Delhi, despite a rise in prices in neighboring areas, the city's CNG prices have remained stable for now, possibly reflecting political considerations ahead of elections. However, the costlier prices in nearby cities are indicative of the broader trend of price hikes in the sector, which are driven by supply and demand dynamics in the natural gas market.
The impact of these price hikes will likely be felt more acutely by users of CNG-powered vehicles and those relying on gas for household cooking, particularly in urban areas where CNG is a preferred alternative due to its lower cost compared to petrol and diesel. Furthermore, the continued reliance on imported LNG to meet demand amid domestic supply shortages could push prices even higher in the coming months, especially as demand for CNG is expected to rise during the festive season.
This price hike also highlights the challenges faced by India's energy sector in balancing domestic energy supply with growing demand. The country’s push to reduce carbon emissions and transition towards cleaner energy sources has led to an increased focus on CNG as an eco-friendly alternative to traditional fuels. However, the pressure on natural gas supplies, combined with the global volatility of LNG prices, has created a challenging environment for both consumers and suppliers in the sector.
In conclusion, while CNG users in Delhi have been spared from the latest price hikes for the time being, those in other major cities like Mumbai, Noida, and Gurugram are already facing higher fuel costs. The continued supply challenges in the natural gas sector, along with the impact of local taxes, suggest that these price increases may become more common across other parts of the country, especially in the coming months.
