PNG, CNG prices to fall by Rs. 1.5/kg

The move follows the third consecutive reduction in domestic natural gas prices by 20 per cent to US$3.06/mmbtu. 

Prices of piped natural gas (PNG) and compressed natural gas (CNG) are likely to fall by INR 1 to INR 1.5 per kg with effect from 1st April.

The move follows the third consecutive reduction in domestic natural gas prices by 20 per cent to US$3.06/mmbtu.

Mahanagar Gas Ltd (MGL) and Indraprastha Gas Ltd (IGL) are planning to reduce the cost of PNG and CNG to pass on the benefit of falling gas prices to consumers.

The Government’s 20 per cent cut in domestic gas prices will translate into a reduction of INR 0.5/scm (standard cubic metre to INR 1.5/scm in PNG prices for domestic customers and a INR 0.8/kg-1.5/kg cut in CNG prices, according to India Ratings & Research (Ind-Ra) estimates. 

Lower prices are seen to directly impact the revenues of domestic gas producers by INR 3,000-3,200 crore during the first half of FY17.

City Gas Distribution (CGD) entities could incur a INR 1.9-2 lower cost per SCM on gas procurement on the back of the revised natural gas pricing.

A INR 1/kg cut in CNG prices will make CNG 47 per cent more competitive than diesel in Delhi, compared with the current 41 per cent.

CNG contributes more than 50 per cent of total volume of gas sold by the CGD entities.