CNG rate increase due to court orders: IGL

A day after hiking CNG price by a steep Rs 4.50 per kg, Indraprastha Gas Ltd on Friday said the rate increase were forced by court orders that led to cut in allocation of cheaper domestic natural gas.

Following a Gujarat High Court order, the government ordered all of domestically available natural gas for city gas projects to be equitably distributed among all the companies in the country than convert the fuel into compressed natural gas (CNG) for sale to automobiles. Prior to this, cheaper domestic gas was largely available to firms retailing CNG in Delhi and Mumbai.

Keeping in view the limited domestic availability, the government ordered that about 80 per cent of the requirement of CNG retailers be met from cheaper domestic gas and the rest to be imported.

For IGL, which is the sole retailer of CNG in national capital, the order would not have made a big difference as domestic gas made up for 77-80 per cent of its requirement.

But for Mahanagar Gas Ltd, which solely relies on domestic gas for CNG retailing in Mumbai, the cut would have meant a Rs. 16 per kg increase in CNG price in the city because of costlier imported LNG coming in to replace the cut in allocation.

With such a steep hike in price on horizon, Mumbai’s auto rickshaw owners association approached Maharashtra High Court and got a stay on implementation of the order in the state.

“This essentially meant that our APM (cheaper domestic) gas supply was cut to implement the uniform allocation order (of Gujarat High Court that was also upheld up the Supreme Court),” IGL Managing Director Narendra Kumar told PTI.

IGL’s APM gas allocation was reduced from 23,42,000 cubic meters per day to 22,28,000 cubic meters a day. “APM gas makes up for only 72 per cent of our requirement,” he said.

He said the shortfall was made good by increased buying of imported LNG which has led to rise in gas cost by 13 per cent.

“We have not passed on the entire increase to customers. Some 20 per cent of the increase that was due has been absorbed by us,” he said.

Mr. Kumar said the order cutting the gas supply was effective on December 25 and IGL implemented the changes in rates the next day.

“Our gas allocation has been cut by 5 per cent which has led to the price hike,” he added.

Besides CNG, cooking gas piped to kitchens has also been increased by Rs. 2 per kg.

CNG now costs Rs. 50.10 per kg in Delhi and Rs. 56.70 per kg in Noida, Greater Noida & Ghaziabad from midnight tonight.

The price of piped natural gas (PNG) to the households in Delhi is being revised from Rs. 27.50 per standard cubic metre to Rs. 29.50 per scm up to consumption of 30 scm in two months.

Beyond consumption of 30 scm in two months, the applicable rate in Delhi would be Rs. 52 per scm.

Due to differential tax structure in the state of Uttar Pradesh, the applicable price of domestic PNG to households in Noida, Greater Noida and Ghaziabad would be Rs. 31 per scm up to consumption of 30 scm in two months, which has been increased from existing Rs. 29 per scm.

Beyond consumption of 30 scm in two months, the rate applicable in these cities would be Rs. 54 per scm.

CNG price was last revised in September 8 when it was hiked by a steep Rs. 3.70 per kg.

Price of Compressed Natural Gas (CNG) sold to automobiles in the national capital had then increased from Rs. 41.90 to Rs. 45.60 per kg.

Also at that time, the price of piped cooking gas, called PNG for households, had been hiked from Rs. 24.50 per scm to Rs. 27.50 per scm.

IGL, the sole retailer of CNG and PNG in Delhi, said the increase was primarily due to increase in input cost as a result of reallocation of domestically produced gas quantities by the government for all City Gas Distribution Companies across the country.

“There has been a reduction in allocation of APM gas to us, which is forcing us to source more quantity of market priced imported R-LNG, whose prices are currently on an upswing. This has affected our overall input cost by over 13 per cent”.

“In addition, there has also been an increase in the operating expenses including increase in minimum wages announced by the government with effect from October 2013,” IGL had said statement yesterday.

“In terms of volume, there has been nearly 5 per cent decrease in the overall quantity of domestic gas allocated to IGL for Delhi, Noida, Greater Noida and Ghaziabad.

“The reduction in allocation as well as increase in demand is forcing IGL to source much higher priced imported R-LNG.

“The prices of R-LNG have been on the rise recently and therefore, new R-LNG quantities are available in the market at much higher prices than the existing ones,” it said.

IGL however, said the increase would not have a major impact on the per km running cost of vehicles.

For autos, the increase would be 13 paisa per km, for taxi it would be 22 paisa per km and in case of buses, the increase would be Rs. 1.30 per km, which translates to just over two paisa per passenger-km.