New Delhi: The Indian CNG users might suffer greater financial burden as the government has cut the domestic supply of relatively cheaper natural gas for cities’ retailers by up to 20%. Market sources suggest that if the government fails to cut the excise duty on fuel, then the price of CNG might rocket by ₹4 to ₹6 per kg in the future days.
CNG which is used in vehicles across India and PNG used in kitchens; both are derived from natural gas extracted from numerous sites from the Arabian Sea to the Bay of Bengal. He believes that the latest supply cuts should impact CNG prices, provided that no countermeasures are implemented.
Why Was the Supply Cut?
Four sources familiar with the matter stated above reported that production from older natural gas fields which sells at regulated prices is dropping at a rate of about 5 percent annually. Consequently, the availability of domestic gas to the urban based gas retailers has been adjusted downwards in a bid to conserve the remaining stock for the kitchen use by households. While in May 2023 domestic gas production from these fields satisfied 90 percent of the CNG demand, by October 16, 2024 it has only supplied 50.75 percent of the CNG demand down from 67.74 percent in the previous month.
CNG Prices Stay Put Despite Soaring Oil Prices
Urban gas retailers are now using costly imported Liquefied Natural Gas (LNG) to meet the shortfall. This imported LNG costs between $11-12 per MMBTU in contrast to the $6.50 per MMBTU of domestically produced gas. These additional costs might be likely to increase the CNG prices by ₹4-₹6 per kilogramme.
Even though the prices of CNG has not yet gone up, the retailers are holding negotiations with the Ministry of Petroleum and Natural Gas to explore a viable option. One of the things that must be considered as to how to bring down the price is to cut down the excise duty on the CNG which at present stands at 14 percent making it cost around 14 to 15 rupees per kilogramme. If the government reduces the excise duty then the impact on the price could be checked and consumers would not have to pay hefty prices.
Impact on Key Markets
Any increase in the prices of CNG can turn into a political storey given that there are elections next month in Maharashtra and within the near future in Delhi. CNG has emerged as one of the biggest markets in Delhi and Mumbai of the country, and its price would be affected badly if the above rate is implemented which would make the people to appeal to the government to solve this problem.
While government and retailers continue to hold negotiations, the CNG users of the country are on the edge whether with the cooperation of the government it is possible not to increase the fares or whether they would have to face the burden of rising fuel prices.
Comments are closed.