Government has cut the supply of cheap domestic natural gas to urban retailers by up to 20 percent. Sources say that in such a situation, if there is no reduction in excise duty on fuel, then the price of CNG supplied to vehicles may increase by Rs 4 to 6 per kg. Natural gas extracted from underground and under the seabed within India from sites ranging from the Arabian Sea to the Bay of Bengal is the raw material that can be converted into CNG for vehicles and piped natural gas (PNG) for cooking. Is changed. Four sources with knowledge of the matter said prices of produce from old fields are controlled by the government. These are used to supply city gas retailers. Production from these areas is decreasing by five percent annually. Due to this, supply to urban gas distribution companies has been cut.
There was a cut in the supply of raw materials for CNG.
Sources said the gas supplied to homes for cooking is conserved. In such a situation, the government has cut the supply of raw materials for CNG. Gas obtained from old fields met 90 percent of CNG demand in May 2023 and this is continuously declining. He said that from October 16, the supply has been reduced to only 50.75 percent of the demand for CNG, which was 67.74 percent last month. City gas retailers are being forced to buy imported and costlier liquefied natural gas (LNG) to compensate for the shortage, leading to an increase of CNG prices by Rs 4-6 per kg. Gas sourced from old fields is priced at US$6.50 per million British thermal units (MMBtu), while imported LNG is priced at US$11-12 per unit.
Talks are currently ongoing with the government
Sources said that at present retailers have not increased CNG rates as they are in talks with the Ministry of Petroleum and Natural Gas for a solution. One option is for the government to cut excise duty on CNG. Currently, the central government charges 14 percent excise duty on CNG, which works out to Rs 14-15 per kg. He said that if it is cut, retailers will not have to pass the burden of increased costs on to consumers. The increase in CNG prices is also a political issue as elections are to be held in Maharashtra next month and elections are also to be held in Delhi soon. Delhi and Mumbai are among the largest CNG markets in the country.
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