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Gas output slide to hit prices

business Updated: Mar 29, 2012 01:53 IST
Anupama Airy
Anupama Airy
Hindustan Times
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Your fuel and kitchen bills are both set to shoot up substantially.

Consumers running their vehicles on compressed natural gas (CNG) and households using piped natural gas (PNG) in their kitchens should get ready for frequent hikes in prices of these fuels.

“A substantial fall in domestic gas production will lead to an increased dependence on imported LNG in the days ahead,” said a senior petroleum ministry official.

Since the price difference between imported and domestic gas is huge, an increased dependence on imported gas would mean a higher cost for consumers of CNG and PNG, he added.

“We have been purchasing LNG during the year for anywhere around $10-18 per unit, following a huge dip in domestic gas supplies, essentially coming from Reliance’s KG-D6 fields,” said a senior official at Indraprastha Gas Ltd (IGL).

It should be noted here that there has been a complete stoppage of KG D-6 supplies to IGL since September 2011 due to a decrease in production.

Another official said that after the recent hike in CNG prices by R1.7–1.9 per kg on March 6, the price of this fuel could be revised every quarter.

“The prices of PNG that were raised by Rs 3 per unit in August last year will also have to be increased shortly and consumers will have to get ready for regular revisions,” the official said.

Amidst this hike in CNG and PNG prices, state-owned oil companies are preparing to increase petrol prices by R4-5 per litre with under-recovery on the fuel shooting above Rs 6 per litre.

At the time of revising CNG prices on March 6, the MD of IGL had said that the company was “constrained to revise the retail price of CNG due to an increase in the overall input cost of natural gas being sourced by us.”

With the demand for CNG increasing rapidly, IGL has said that the company has no option but to source costly LNG at over three times the cost of domestic gas to maintain the supplies to consumers.