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CNG in Gujarat set to cost 40% less than petrol

Thursday, 3 October 2013 - 11:25am IST | Place: Ahmedabad | Agency: dna

if Gujarat gets cheaper gas as per Advanced Price Mechanism.

Gujarat stands to save a whopping Rs2,000 crore every year, as prices of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) would come down drastically, when the state starts getting cheaper gas as per Administered Price Mechanism (APM).

As per industry and government estimates, CNG in Gujarat would become over 40% cheaper than petrol and 20% cheaper than diesel when the state is allotted APM gas at the prevailing price of $4.2 per MMBTU (Million Metric British Thermal Unit). Domestic PNG is expected to become cheaper by 40%.

CNG in Ahmedabad currently costs Rs68.80/kg – highest in the country – as against about Rs40 in Mumbai and Rs45 in New Delhi.

Gujarat has been pressing for domestic gas allocation for transport and household segments, but the demand remains unfulfilled. But in the wake of Supreme Court’s order that Gujarat also be allotted gas at the same price as other cities, there’s hope that gas prices in the state will come down.

Meanwhile, state energy minister Saurabh Patel said CNG and domestic PNG consumers would save about Rs2,000 crore each year, if APM comes into effect in Gujarat.

“There is additional burden of over Rs500 crore on households consuming PNG and more than Rs1,400 crore on CNG consumers, due to dependence in imports for gas supplies.

People of Gujarat will save this huge amount because of APM gas,” said Patel.

Gujarat is largest consumer of gas in India, accounting for over 40% of the national consumption, but only a fraction of domestic gas has been allotted to Gujarat. The state thus has to depend mostly on imported gas to meet its huge demand. This is precisely the reason why gas consumers in the state shell out the highest prices for gas.

According to the energy ministry, more than 12.06 lakh households in Gujarat use PNG. Each household stands to save an average of Rs4,244 every year, as per the current APM gas price. Likewise, over 11.77 lakh kg of CNG is consumed in the state per day. Consumers will save nearly Rs4 crore every day, which they have to shell out due to price difference in APM & imported gas.

“Gas consumers in the state will be spared of the enormous additional burden they have been bearing for several years now due to non-allocation of APM gas. However, the bigger question is where the Centre will allot the gas from,” said an industry official.

The consumption of CNG and PNG also helps the central government save diesel and LPG subsidy of Rs715 crore a year.

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