CNG, PNG price cut:  Mahanagar Gas (MGL) on April 8 (Friday) announced a reduction in gas prices in Mumbai. As per reports, CNG will be cheaper by Rs 8/kg while the PNG price has been lowered by Rs 5/standard cubic metre or scm in the financial capital of the country. 

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The development came after the Union Government announced earlier on Friday that for the rest of April, the natural gas prices would be capped at USD 7.92 per unit, as per the newly-approved pricing formula. However, the rates for consumers have been capped at USD 6.5 per unit. 

CNG stands for compressed natural gas while PNG is an acronym for piped natural gas.

Further, Adani Total Gas Ltd (ATGL) has also reduced the price of CNG by up to Rs 8.13/kg while the rate of PNG has been slashed by up to Rs 5.06/scm with effect from 12 am, April 8, 2023.

As per the formula approved by the Union Cabinet on Thursday, the prices of piped cooking gas and compressed natural gas used by vehicles have been cut by up to 10 per cent. The Cabinet in its order approved a change in the formula that is used to calculate the price of natural gas and fixed ceiling price (or upper cap) to help cut the prices of these essential commodities. The changes approved by the Cabinet in the gas pricing formula are per the recommendations of a committee headed by Kirit Parikh.

CNG, Piped Cooking Gas to cost 10% less: What is the revision in Gas Pricing Formula?

Union I&B Minister Anurag Thakur informed that the Union Cabinet has decided to index the price of APM gas, or the natural gas derived from old oil fields, to the price of imported crude oil. Earlier, it was benchmarked to gas prices in surplus nations like the United States of America, Russia and Canada.

After this decision, APM gas will now be priced at 10 per cent of the price of the Indian basket of crude oil — which is the cost of the basket of crude oil that India imports.

Additionally, the rate from this calculation will have an upper ceiling of USD 6.5 per million British thermal units (Btu). The Minister further informed that a base price, or floor rate, of USD 4 per mmBtu, will also come into effect.

This new ceiling price announced by the Cabinet is much lower than the prevalent rate of USD 8.57 per mmBtu. Hence, this would lead to a cut in prices of CNG and piped cooking gas, he added.

 

How much will CNG, and PNG prices be cut in Delhi, and Mumbai?

 

Effectively, the cost of piped cooking gas prices will reduce by up to 10 per cent across cities, and there will be a slightly less than 10 per cent cut in CNG prices. 

CNG price in Delhi will reduce by up to Rs 6 (down from Rs 79.56 per kg to Rs 73.59) and the cost of piped natural gas will reduce from Rs 53.59 per thousand cubic meters to Rs 47.59 — a reduction of Rs 6 per thousand cubic meters. 

Mumbai will see a price cut of Rs 8 per kg of CNG. The CNG prices in the city will go down from Rs 87 to Rs 79 per kg, while PNG prices will reduce from Rs 54 to Rs 49 per scm.

 

GA name Current CNG prices (Rs./kg) Expected CNG prices (Rs./kg) Change in CNG prices Current PNG prices (Rs./SCM) Expected PNG prices (Rs./SCM) Change in PNG prices
Pune 92 87 5 57 52 5
Sindhudurg 95.9 89.9 6 55 50 5
Mumbai 87 79 8 54 49 5
Delhi 79.56 73.59 6 53.59 47.59 6
Bengaluru 89.5 83.5 6 58.5 52 6.5
Meerut 91 83 8 58.5 52 6.5
Bokaro 93.98 86.98 7    

*Subject to final calculation of impact of unified tariff, RLNG component, earlier cost transfer to consumers, etc.

CNG, Piped Cooking Gas to cost 10% less: Why was this needed?

As per a PTI report, rates of PNG, and CNG have jumped 80 per cent in one year to August 2022, following a spurt in international energy prices.

The current price of the Indian basket of crude oil is USD 85 per barrel and 10 per cent of this figure translates to USD 8.5. However, the ceiling means that the APM gas producers - ONGC and Oil India Ltd - will only receive USD 6.5 per mmBtu.

The minister further informed that the floor prices and ceiling cap would be in place for two years, following which the rates will rise by USD 0.25 per mmBtu per year.