CNG, PNG prices raised by ₹3/kg in NCR

State-run Indraprastha Gas (IGL) gas raised the prices of compressed natural gas (CNG) and piped natural gas (PNG) by ₹3 per kg. The prices came into effect on Saturday.

This is the first hike in retail gas prices after the government raised the price of domestic gas to an all-time high $8.57 per million British thermal unit (mBtu) for H2 FY23 based on the administered pricing mechanism (APM) earlier this month.

The renewed price for CNG in Delhi stands at ₹78.61 a kg, while for Noida, Greater Noida and Ghaziabad, the price has been hiked to ₹81.17 per Kg. In Gurugram, it will cost ₹86.94 per Kg.

Similarly, prices of PNG in Delhi will now cost ₹53.59 per standard cubic meters (SCM). In Ghaziabad, Noida and Greater Noida, PNG will cost ₹53.46 per SCM, while in Gurugram, it will cost ₹51.79 per SCM.

There are a total of 963 CNG stations in the NCR as well as 22,24,055 domestic PNG connections. The commercial PNG connections were 5,185, while industrial connections stood at 5,361. CNG is primarily used in automobiles, particularly city transport, while PNG is used in households for cooking. Industries such as fertilisers and power generators also use gas. CNG and PNG consumers account for 50 per cent and 10 per cent of city gas volume, respectively. City gas distributors have been taking successive price hikes since April 2021 to manage their cost pressures. To illustrate, CNG prices have increased by a massive 75 per cent as prices of competing crude oil-linked petrol and diesel have also increased, Crisil Ratings pointed out.

Demand destruction

The International Energy Agency (IEA) has projected that India’s natural gas consumption is expected to decline by 1.5 per cent in 2022 as high prices are adversely impacting demand. The world’s third largest energy user consumed 63,907 million standard cubic meters (MSCM) of natural gas in FY22. Crisil in a recent report said that over the past 12 months, the average price of liquefied natural gas (LNG) contracts, benchmarked against crude oil prices, rose around 45 per cent to $14.5-15.0 per mbtu, while spot LNG prices have surged by around 150 per cent to $38-40 per mbtu. Expected sustenance of these high gas prices will moderate India’s city gas consumption volume growth to 8-10 per cent this fiscal (FY23) versus an earlier projection of 20-25 per cent, it added. Crisil Director Naveen Vaidyanathan pointed out that elevated gas prices are expected to reduce demand for industrial PNG by 10-12 per cent this fiscal, as price-sensitive industrial consumers switch to alternative fuels such as propane and fuel oil. “Demand for residential PNG, although more resilient to higher prices, may also grow a modest 2-5 per cent as employees return to office with the Covid-19 pandemic subsiding. CNG demand is still expected to rise 25-30 per cent on the back of an expanding network of CNG stations to new geographic areas and higher sales of factory-fitted CNG cars, despite narrowing price differential with competing petrol and diesel,” he added.

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