CNG price may rise ₹4-6 on input supply cuts to gas retailers

Government cuts domestic gas supplies to city retailers, leading to potential CNG price hike unless excise duty is reduced.

“The Government has slashed by up to 20% the supplies of cheaper domestically produced natural gas to city retailers — a move that may result in ₹4-6 per kg hike in the price of CNG sold to automobiles, unless excise duty on the fuel is cut,” sources said.

Natural gas pumped from below the ground and from under the seabed from sites ranging from the Arabian Sea to Bay of Bengal within India is the raw material that is turned into CNG for sale to automobiles and piped cooking gas to households.

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“Production from legacy fields, whose price is regulated by the Government and which are used to feed city gas retailers, has been falling by up to 5% annually due to natural decline that has set in. This has led to supply cuts to city gas retailers,” four sources in know of the matter said.

While the input gas for piped cooking gas that households get is protected, the Government has cut supply of raw material for CNG. Gas from legacy fields used to meet 90% of the demand for CNG in May 2023 and has progressively fallen. “The supply was cut to just 50.75% of the CNG demand beginning October 16 from 67.74% last month,” they said.

City gas retailers are forced to buy imported and costlier liquefied natural gas (LNG) to make up for the shortfall, which will lead to a hike in CNG prices that varies from ₹4-6/kg.

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