Govt decides to offer 100% 'cheaper' domestic gas for city use

Prices of gas for the transport sector (autos, cars and commercial vehicles) and households using piped gas for cooking would reduce by 20-30 per cent. This is because the Government has decided to provide ‘cheaper’ gas produced from domestic fields for such use.

This would come as a relief to consumers in several cities, including Delhi, Mumbai, Ahmedabad, Sonepat, Meerut, Bareilley, Indore, Surat and Hyderabad.

It is to be seen how soon the companies providing gas to cities pass on the benefit to consumers. GAIL Chairman and Managing Director B. C. Tripathi said the decision would be implemented immediately. But the companies may take a couple of days to pass on the benefit because of operational issues.

Currently, due to shortage of domestically produced gas, many cities sell ‘expensive’ imported gas to their customers.

For example, in Delhi and nearby areas, Indraprastha Gas supplies compressed natural gas (CNG) and piped natural gas (PNG) that comprise 80 per cent domestically produced and 20 per cent imported gas. Now, Indraprastha Gas would get 100 per cent domestic supply of gas.

This would lead to a drop in CNG prices in Delhi by about ₹ 15 a kg (about 30 per cent). At present, every kg of CNG costs ₹ 50.10. Similarly, there would be a reduction of about ₹ 5 per scm (about 20 per cent) for PNG customers. At present, PNG in Delhi costs ₹ 29.50 per scm up to a consumption of 30 scm in two months.

Consumers in cities such as Ahmedabad, where supply to CNG and PNG consumers is met mostly by imported gas, would stand to benefit to a greater extent by the latest decision.

The move of the Government is seen as another step to woo the common man just a few months before the general elections. However, Minister for Petroleum and Natural Gas M. Veerappa Moily says that there is no ‘election motive’ behind these decisions.

“This debate (to supply 100 per cent domestic gas for city distribution) has been on for the past four-five years. It has nothing to do with the elections. Our target is always to benefit the common man. If it helps the common man, we are happy. If some political party also stands to benefit, it is incidental,” Moily told mediapersons.

The Government has decided to supply 8.32 million metric standard cubic meters per day (mmscmd) of gas for city gas distribution against the earlier allocation of 6.8 mmscmd.

The additional requirement of 1.92 mmscmd is to be met by imposing pro-rata cuts in supply of domestic gas (excluding those from blocks under the NELP regime) to sectors other than the priority sector. The sectors where gas supplies would be curtailed include petrochemicals, refineries, steel and small industrial consumers.

"We are not depriving anyone of gas. But cheaper gas would be given to CNG and PNG consumers. Industrial buyers would have to buy expensive gas,” said Petroleum Secretary Vivek Rae.

However, the rider is that gas prices from all domestic sources is expected to be doubled from April 1 when the prices of the commodity would be determined by a formula-based mechanism. It is to be seen if this reduction in CNG and PNG price would be nullified after the new gas price comes into play.

The Government also claims that such a move would encourage more cities to take up CNG and PNG projects. Currently, just 50-55 cities and towns have these facilities. The target is to expand the city gas network to another 300 cities.

siddhartha.s@thehindu.co.in

(This article was published on February 3, 2014)
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