Petroleum Minister Veerappa Moily Monday said the government has cut the CNG (Compressed Natural Gas) price by Rs.15 per kg, or around 30 percent, with immediate effect. The price of piped natural gas (PNG) has also been cut by Rs.5, or nearly 20 percent, per cubic metre.
"The ministry has decided to raise the share of domestic gas to 100 percent of the country's requirement for CNG and PNG", that are used for transportation and domestic purposes, Moily said at a press conference here.
The move is aimed to popularise the use of natural gas, considering the high pollution levels in many cities of the country.
The biggest beneficiaries will be cities that use a lot of imported LNG, Moily added. Among these cities are Ahmendabad, Surat, Indore, Hyderabad and Meerut.
State-run Indraprastha Gas Limited (IGL), the distributor of CNG in Delhi, and other city gas distribution firms will get cheaper domestic gas, Moily said. The exact rates across cities would vary, after taking into account local taxes.
The decision to cut rates comes at a time when the government is struggling to control its fiscal deficit at 4.8 percent of the GDP.
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"The decision to raise the share of domestic gas is also because of additional economic benefits that would accrue on account of reduced subsidy burden for the government," Moily said.
The decision comes after last week's cabinet decision to raise the quota of subsidised LPG per household from nine to 12 cylinders a year, which is estimated to increase the government's subsidy burden by Rs.5,000 crore.