 "India faces CNG shortage, rising prices threaten clean air efforts in Delhi")
India is facing a sharp decline in the availability of low-cost compressed natural gas (CNG) for vehicles, as domestic production fails to keep pace with rising demand. The shortfall threatens to exacerbate air pollution in major cities, including the smog-choked capital, New Delhi, according to a report by The Economic Times.
Retailers such as Indraprastha Gas Ltd and Mahanagar Gas Ltd are increasingly relying on more expensive imports and challenging production from new Indian fields. These factors have prompted both companies to raise the prices of compressed natural gas (CNG), which fuels cars, buses, taxis, and rickshaws across the country.
CNG’s role in combating pollution in Delhi
Delhi, one of the world’s most polluted cities, transitioned to CNG more than 20 years ago following a Supreme Court order that mandated the conversion of all public buses to reduce pollution. Later, non-CNG cabs were also banned in the capital region. Although CNG is not entirely ‘green’, it produces fewer smog-related pollutants and has a lower carbon footprint compared to conventional fuels.
However, with Delhi witnessing some of the most toxic smog days on record, experts say that rising CNG prices and the inconvenience of long queues at filling stations could discourage consumers who were drawn to the fuel’s lower running costs, the report said.
This shift could potentially lead people to return to diesel and petrol vehicles, undermining efforts to promote cleaner transportation options.
Impact on vehicle sales and consumer behaviour
The shift to CNG-powered vehicles has gained significant traction in India, with sales surging over 13 times since 2019. In comparison, sales of diesel and gasoline vehicles have declined by 20 per cent and 13 per cent, respectively, during the same period.
Price increases due to supply shortages
India’s limited supply of low-cost gas has been directed toward industrial use, leading to cuts in deliveries to retailers by up to 40 per cent. The fuel from older fields is currently priced at $6.5 per million British thermal units (mmbtu), compared to $10 for gas from newer fields and $13 to $14 for imports. As a result, Mahanagar Gas has already raised prices by over 2 per cent in some areas and will likely need to increase prices further to maintain profitability, the report said.
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The Indian government has set ambitious plans to expand the CNG station network significantly, aiming to triple the number of stations by 2030. However, these goals may now be in jeopardy due to supply issues.
Struggling to meet growing demand
India’s gas production has failed to keep pace with the country’s economic growth, with daily production increasing by only 3 per cent over the past decade, while consumption surged by 30 per cent. This gap between supply and demand has led to a 73 per cent increase in CNG prices in Delhi since 2021, compared to more modest rises in gasoline and diesel prices.