CNG Price May Go Up Rs 4-6 on Input Supply Cut, Excise Duty Cut to Ease Situation

The federal authorities has truly decreased by roughly 20 % the merchandise of inexpensive domestically created gasoline to metropolis retailers– a relocation that may result in Rs 4-6 per kg stroll within the charge of CNG marketed to vehicles, except import tax obligation on the gasoline is decreased, assets acknowledged.

Natural gasoline pumped from listed beneath the bottom and from below the seabed from web sites various from the Arabian Sea to Bay of Bengal inside India is the uncooked product that’s developed into CNG provide on the market to vehicles and piped cooking gasoline to households.

Production from heritage areas, whose charge is managed by the federal authorities and that are made use of to feed metropolis gasoline retailers, has truly been dropping by roughly 5 % every year because of all-natural lower that has truly embeded in. This has truly brought about present cuts to metropolis gasoline retailers, 4 assets in acknowledge of the difficulty acknowledged.

While the enter gasoline for piped meals preparation gasoline that households get hold of is safeguarded, the federal authorities has truly decreased provide of assets for CNG. Gas from heritage areas made use of to satisfy 90 % of the necessity for CNG in May 2023 and has truly significantly dropped. The provide was decreased to easily 50.75 % of the CNG want begin October 16 from 67.74 % final month, they acknowledged.

City gasoline retailers are required to accumulate imported and dearer dissolved gasoline (LNG) to offset the scarcity, which will definitely carry a few stroll in CNG prices that differs from Rs 4-6/ kg.

The gasoline from heritage areas is valued at USD 6.50 per million British thermal system (mmBtu) as versus imported LNG that units you again USD 11-12 per mmBtu.

For at the moment, the retailers have truly not elevated CNG costs as they’re concerned with the Ministry of Petroleum and Natural Gas to find a treatment, assets acknowledged.

One of the alternatives is for the federal authorities to scale back import tax obligation on CNG. Currently, the principle federal authorities levies a 14 % import tax obligation on CNG, which converts proper into Rs 14-15 per kg. If that is decreased, the retailers will definitely not want at hand down the improved worth to clients, they acknowledged.

CNG charge stroll is moreover a political drawback on condition that Maharashtra mosts prone to the surveys following month and political elections are moreover due in Delhi rapidly. Delhi and Mumbai are amongst probably the most vital CNG markets within the nation.

Sources acknowledged the gasoline merchandise to metropolis gasoline retailers wanted to be decreased after the federal authorities decided to get well gasoline to ONGC-promoted OPaL petrochemical plant in Dahej, Gujarat.

The plant was initially alloted 4.12 million standard cubic meters each day of domestically created gasoline. However, the appropriation for various elements was decreased to 1.95 mmscmd and all through Covid was reduce in half.

Lack of assured residential gasoline was the most important issue for OPaL going through losses, assets acknowledged, together with that the federal authorities has truly at the moment accepted a plan to revitalize the system. This plan consists of marketer Oil and Natural Gas Corporation (ONGC) instilling added Rs 10,501 crore as fairness and the system being supplied domestically created gasoline.

The Union Cabinet accepted the appropriation of three.44 mmscmd of residential gasoline– primarily originating from brand-new wells of ONGC. This brought about minimal gasoline being supplied for metropolis gasoline retailers.

Girish Kadam, Senior Vice President & & Group Head– Corporate Ratings, Icra Ltd, acknowledged, “The APM gas allocation has been reduced for the CGD sector by 20 per cent of the current domestic gas consumption by the sector. The reduction in APM allocation will have to be replaced by more expensive HPHT gas or (imported) LNG, which will push the overall gas costs for the sector.”

To maintain cost margins at current levels, CNG prices will definitely must be enhanced round Rs 5-5.5 per kg.

Indraprastha Gas Ltd, which retails CNG within the nationwide funding, and Mumbai- primarily based Mahanagar Gas Ltd in governing filings talked about that merchandise of domestically created gasoline, which was supplied at a capped worth fifty % of the imported charge, has truly been decreased.

“The company gets domestic gas allocation for meeting the requirement of CNG sales volumes at the pricing fixed by the government (presently at USD 6.5 per million British thermal unit). Based on communication received by the company from GAIL (India) Ltd (the nodal agency for domestic gas allocation), this is to inform that there has been a major reduction in domestic gas allocation to the company effective from October 16, 2024,” IGL acknowledged in a declaring.

The modified residential gasoline appropriation to IGL has to do with 21 % a lot lower than earlier appropriation, “which will have an adverse impact on profitability of the company”, it acknowledged, together with that it stays in conversations with important stakeholders to scale back the affect.

Separately, MGL acknowledged primarily based on Policy Guideline dated August 10, 2022, launched by the Ministry of Petroleum and Natural Gas, domestically created Administrative Price Mechanisms (APM) gasoline is to be alloted to metropolis gasoline circulation (CGD) companies for prime precedence sections, particularly residential piped gasoline and CNG (transportation).

The plan specifies that the provision of residential gasoline to CGD entities will definitely be made simply roughly the quantity supplied and alloted to GAIL (India) restricted for these sections.

“…the company is exploring options of sourcing gas through domestically produced high pressure high temperature (HPHT) gas, new well/well intervention gas (NWG) from ONGC and benchmark-linked long-term gas contracts, so as to continue to provide gas to its customers with price stability,” MGL included.

Adani Total Gas Ltd– the assorted different substantial metropolis gasoline vendor– in its declaring acknowledged the APM valued residential gasoline appropriation to the enterprise has truly been minimized by round 16 %, dependable October 16, 2024, contrasted to the sooner appropriation.

“While the company shall take all steps needed to optimise the profitability, it may however be noted that pending the resolution, there would be an adverse impact on the profitability of the company,” it acknowledged.

(This story has truly not been modified by News18 personnel and is launched from a syndicated data agency feed – PTI)