Vikrant Shekhawat : Oct 20, 2024, 02:20 PM
CNG Price: CNG (Compressed Natural Gas) users may face a new wave of inflation in the coming days. While there is no cut in the prices of petrol and diesel, the government has cut the domestic supply of natural gas by 20% for the supply of CNG in urban areas. This may have a direct impact on the prices of CNG, and the price of CNG may increase by Rs 4 to Rs 6 per kg in the next few days.Why was the supply of natural gas cut?According to sources, the production of natural gas from old gas production sites is decreasing. The gas obtained from these areas was mainly used for urban gas distribution companies, but production is declining by 5% annually. Due to this, the government has decided to cut the supply of raw material for CNG. However, the supply of domestic cooking gas (PNG) is protected, due to which the prices of gas used in the homes of common people will not be affected.In May 2023, the gas drawn from old production sites used to meet 90% of the total demand for CNG, but now it has come down to 50.75% in October. Last month this supply was 67.74%, which has now come down further.Possible increase in CNG pricesCity gas retailers now have to buy imported and expensive liquefied natural gas (LNG) to make up for this shortfall. This is likely to increase the price of CNG by Rs 4-6 per kg. While the gas from old production sites was priced at US$ 6.50 per million British thermal units (MMBTU), imported LNG is priced at $ 11-12 per MMBTU, increasing the cost.However, retailers have not yet increased CNG rates, as they are in talks with the Ministry of Petroleum and Natural Gas. They are considering various options to resolve the issue so that there is no additional burden on consumers.What are the options available to the government?One possible option is for the government to cut the excise duty on CNG. Currently, the central government levies 14% excise duty on CNG, which comes to around Rs 14-15 per kg. If the government reduces this tax, retailers will not need to increase prices, and consumers will not be burdened.The issue of CNG price hike is also politically sensitive, as elections are near in states like Maharashtra and Delhi. Major cities like Delhi and Mumbai are big markets for CNG, and the public here may be directly affected by the increase in CNG prices.ConclusionThe possible increase in CNG prices may lead to inflation for vehicle owners who depend on CNG in the coming times. Talks are going on between the government and retailers on this matter, and it is expected that a solution will be found that does not put additional burden on consumers. However, if the excise duty on the fuel is not reduced, CNG prices are almost certain to increase.