NEW DELHI: Indraprastha Gas Ltd on Friday raised PNG (piped natural gas) rates in the capital and neighbouring cities by Rs 2.63 per unit to partially pass on the impact of rising natural gas prices but left CNG (compressed natural gas) rates unchanged at Rs 75.61 per kg.
The unchanged CNG rates indicate a dilemma IGL — and other CNG operators — are facing due to the long freeze on diesel and petrol rates in spite of elevated oil prices.
Passing on the impact of higher gas prices fully will narrow the price advantage over liquid fuels and discourage conversion to CNG, which will impact the viability of their investments in network expansion.
After the latest hike, the second within a fortnight, PNG will cost Rs 50.59 per SCM (standard cubic meter) in Delhi against Rs 47.96 earlier. The rate will be Rs 50.46 per unit in Noida, Greater Noida and Ghaziabad. In Gurugram, it will be priced at Rs 48.79.
For IGL, the key problem is limited availability of government-controlled domestic gas, the price of which too had doubled in April.
In the absence of inadequate supply from domestic sources, more LNG (gas imported in ships) has to be sourced from the spot market to meet double-digit growth in CNG and PNG demand.
LNG’s share in IGL’s sales stood at 20% in 2021-22. Spot LNG prices had shot up to $40 per unit (mmBtu) after the Ukraine conflict broke out and are hovering at $30, or more than three times the normal rate.
The rupee’s depreciation has further added to the price pressure as it increases the impact. The thumb rule is that every dollar increase in gas price has an impact of Rs 4-4.50 on retail rates. This rises with the weakening of the Indian currency.
In spite of such pricing pressure, IGL, which occupies a key position in Delhi’s fight against pollution, has a limit to how much it can raise the price of CNG as long as diesel and petrol prices do not reflect the market reality.