Close on the heels of a sharp increase in petrol prices, Compressed Natural Gas (CNG) rates were hiked by a steep Rs 2 per kg today, mainly on account of a fall in the rupee value against the US dollar, pushing up the cost of inputs.
Indraprastha Gas Ltd (IGL), the sole supplier of CNG to automobiles and piped cooking gas to households in the national capital region, said CNG will cost Rs 32 per kg in Delhi from midnight tonight, as against Rs 30/kg at present.
Similarly, in neighbouring Noida, Greater Noida and Ghaziabad, CNG will cost Rs 2.30 per kg more -- at Rs 35.90/kg -- from midnight tonight, the company said in a press statement here.
This is the fifth increase in CNG prices this year and follows the Rs 3.14 per litre hike in petrol prices effected by fuel retail firms from September 16.
The hike was necessitated because IGL is being forced to buy expensive imported LNG due to a drop in supplies from Reliance Industries' eastern offshore KG-D6 gas field. Also, the rupee depreciation has made raw material -- that is, natural gas from Reliance, state-owned GAIL and imported LNG -- even costlier.
The government has fixed the price of domestic gas produced by state-owned ONGC and Reliance in US dollar terms and everytime the rupee depreciates against the US currency, users end up paying more. Gas from both Reliance and ONGC is priced at $4.20 per million British thermal units.
On top of the basic gas price, state gas utility GAIL charges a marketing margin in US dollars for the effort involved in selling the gas produced by ONGC. GAIL charges a marketing margin of $0.11 per mmBtu, while Reliance also charges a $0.135 per mmBtu marketing margin.
IGL had contracted 0.308 million standard cubic metres per day of gas from Reliance, but following a drop in KG-D6 output, supply has dropped to just 0.1 mmscmd. This has forced the company to buy more imported liquefied natural gas (LNG), which is priced at over $17 per mmBtu.
The company is buying some 0.3 mmscmd of imported LNG.
"We are constrained to increase the price of CNG due to a major increase in the input cost of the entire pool of natural gas sourced by us as a result of recent steep appreciation of the dollar vis-a-vis the rupee and increased dependence on imported LNG," IGL Managing Director Rajesh Vedvyas said.
With the demand for CNG generally being highest during the second half of the financial year and the availability of KG-D6 gas constantly declining, IGL has been forced to increasingly depend on costly LNG from the spot market.
"The base price of natural gas procured by IGL from all its sources, i.E. APM, KG-D6, long term R-LNG as well as spot R-LNG, is in dollars per mmBtu," an IGL press statement said.
Vedvyas clarified that that this increase would have a minor impact on the per kilometre running cost of vehicles.
For autos, the increase would be 6 paise per km, for taxis, it would be 10 paise per km and in the case of buses, the increase would be 57 paise per km.
"Despite the aforesaid price increase, CNG would still offer over 65% savings toward running costs when compared to petrol-driven vehicles at the current level of prices. When compared to diesel-driven vehicles, the economics in favour of CNG at a revised price would be over 22%," IGL added.
