The price of compressed natural gas (CNG) was cut by Rs. 15 per kg and cooking gas piped to kitchens by Rs. 5 after the Centre decided to supply cheaper domestic gas to fuel retailers in Delhi.
Oil minister M Veerappa Moily said the government had decided to raise allocation of natural gas from domestic fields to city gas entities to 100% from the current limit of 80%.
This would be done by cutting supplies to non-core sectors such as petrochemicals, steel and refineries.
“If the move helps us in polls, it would be incidental. Our aim is to help the common man,” Moily said while announcing the price cut. The central government told the Supreme Court it would give CNG at uniform prices to all states that had a distribution network.
The decision would help in reduction of prices of compressed natural gas (CNG) retailed to automobiles in cities such as Delhi and Ahmedabad.
It would also bring down prices of piped cooking gas to households as cheaper domestic gas would replace costlier imported LNG that entities are using.
“Our target is common man... we want to give common man a relief and in a way this is an anti-inflationary measure,” the minister said.
Mumbai currently sources its entire gas requirement from domestic fields and as such there will be no cut in rates in the city. However, in Delhi, which presently uses as much as 28% of costlier imported LNG, and cities in Gujarat like Ahmedabad which too were heavily reliant on imported fuel, will see a price cut.
“This (move) would lead to reduction in price of CNG and PNG across the country (except in those cities which are already getting 100% domestic gas such as Mumbai). The price of CNG in Delhi would be reduced by about Rs. 15 per kg (about 30%). There will also be a reduction of about Rs. 5 per cubic metres (about 20%) in the price of PNG," Moily said.
While the orders for increasing domestic gas supply to CNG entities were issued on Monday, the decision would take around three days to come into effect as gas firms sign new supply agreements.
While the CNG price was cut by almost 30% in Delhi, Moily said this was a positive signal for other states and cities, which could also soon see price reduction of 25-30%.
The price of CNG was earlier hiked by 4.50 per kg by in Delhi in December last year. The price of cooking gas piped to kitchens was increased by Rs. 5.15 per kg.
Then Delhi chief minister-designate Arvind Kejriwal had questioned the timing of the steep hike in CNG price which was second such hike in three months in the city. “CNG rates hiked in Delhi. Isn't the time suspect?” Kejriwal had tweeted.
In a bid to reduce the price of CNG, the Delhi government had earlier decided to approach the Supreme Court to challenge Centre's cut in allocation of cheaper domestic natural gas to the national capital following an order by the Gujarat high court.
Following a Gujarat HC order, the Centre had ordered all of domestically available natural gas for city gas projects to be equitably distributed among all the companies in the country than convert the fuel into compressed natural gas (CNG) for sale to automobiles.