Oil Ministry to divert gas from industries after CNG, piped gas prices jump 70% in a year

Use of domestic gas instead of imported fuel will bring down the cost of raw material and ease CNG and PNG rates, officials said.

The Oil Ministry has ordered the diversion of natural gas from industries to the city gas distribution sector to cool CNG and piped cooking gas prices that have shot up by 70% on the use of imported fuel.

Less than three months after it ordered the use of costlier imported LNG to meet incremental demand for automobile fuel CNG and household kitchen gas PNG, the ministry on August 10 reverted to an old policy of primarily supplying domestically produced gas for city gas operations.

The allocation for city gas operators like Indraprastha Gas Ltd in Delhi and Mahanagar Gas Ltd of Mumbai has been increased from 17.5 million standard cubic meters per day to 20.78 mmscmd, officials said.

The increased allocation will meet 94% of the demand for CNG to automobiles and piped cooking gas to household kitchens in the country.

Previously, about 83-84% of the demand was met and the remaining was met through the import of LNG by GAIL, they said.

Use of domestic gas instead of imported fuel will bring down the cost of raw material and ease CNG and PNG rates, officials said.

The move follows a massive jump in CNG and PNG prices in the country in the last one year as operators used costlier imported LNG. CNG prices in Delhi went up by a massive 74% (from ₹43.40 per kg in July 2021 to ₹75.61 per kg now) while PNG prices rose by 70% (from ₹29.66 per standard cubic meter to ₹50.59 per scm).