cng price hike: CNG vehicles, households to pay 18% more for gas now

The price of gas supplied to CNG vehicles and households is up 18% as of Monday to $10.5 per mmBtu in monthly revision. This is three and a half times the rate that city gas companies paid for domestic deliveries at the end of March and almost six times that of last August. supplies the gas, a mixture 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 kitchen fuel. Green Gas Ltd increased CNG rates by 5.3 per kg in Lucknow to ₹96.10 per kg on Monday.

Lower taxes and traditionally cheaper domestic natural gas had helped keep CNG rates lower for years compared to heavily taxed gasoline and diesel in the country. But rising gas prices threaten to derail the math: in one year, CNG prices in Delhi are up 74% and in Mumbai by 62% and are expected to rise further.

Preferred CNG could slow sales of new gas-powered cars, which have set new records in recent years and hurt the pace of conversion of petrol and diesel vehicles, some city gas executives warned. “While petrol prices are under artificial pressure, CNG prices are steadily rising, which may soon help close the fuel gap,” said one executive.

The domestic price of natural gas, determined by a government-established formula linked to average tariffs at international hubs, was $1.79 per mmBtu last August. It rose to $2.9 last October and $6.1 in April. Because domestic production was not sufficient to meet the growing demand from town gas players, the government ordered GAIL to import gas to make up the shortfall. GAIL now covers the entire needs of city gas companies, but the price charged is the mixture of domestic and imported gas. The mixed rate, which varies each month based on the cost of imported gas, rose from $8.9 in July to $10.5 in August.

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