Sources say marginal price difference is pushing people to make the switch.
It’s been a few months since the liquefied petroleum gas (LPG) became marginally cheaper than piped natural gas (PNG) in Ahmedabad. The impact has been felt by Adani Gas Limited, the natural gas distributor in Ahmedabad, which is witnessing fall in new customers or connections. Simultaneously, the number of disconnections has continued. LPG distributors estimate that thousands of PNG customers in Ahmedabad have either shifted or are considering shifting to LPG.
At present, it is difficult to estimate the exact numbers of those who have shifted. “We have seen rise in applications for new connections. Through industry sources, we have heard that since May, thousands of PNG customers have cancelled their connections and applied for LPG connection,” said president of All India LPG Distributors’ Federation, Gujarat chapter, PM Patel. In past six to seven years, Adani had acquired over 2 lakh PNG customers in Ahmedabad.
An official of Adani Group confirmed that the trend of getting a huge number of applications for PNG connection every month has stopped. “Annually we used to acquire 40,000 new connections. Now it is difficult to get that number. Earlier, we used to witness cancellation of about 2,000 connections every year. That trend has continued,” said the official.
Meanwhile, the company had levied Rs250 per month for May and June each as security deposits. “For May and June, the bill of customers had drastically increased. The primary reason for the increased bill was rise in PNG price while the secondary reason was collection of security deposits,” said the official.
At present, Adani Group is operating PNG business at very nominal margins, claims the official. “If the Centre announces hike in LPG prices, even we will have to increase the rate,” said the official.
In April, Adani Gas revised the price of PNG from Rs31 per cubic metre to Rs34 per cubic metre. Now, 1 kg of PNG is approximately priced around Rs40 per kg against Rs29 per kg of LPG. However, LPG is sold at highly subsidised rate while PNG attracts 15% VAT.
A family buying 12 LPG cylinders in a year gets nine LPG cylinders at the subsidised rate of Rs415 for a 14.2 kg cylinder. The remaining three can be procured at a price of around Rs900 per cylinder. On an average, including subsidised and non-subsidised cylinders, LPG costs around Rs38 per kg.
In case of PNG, the state government levies 15% VAT. Thus, about 16 cubic metre PNG, which is equivalent to 14.2 kg of LPG, costs around Rs40 per kg to the customer. So annually, PNG customers pay Rs2 more per kg.
On an average, a family consumes around 170 kg of LPG or PNG. Annually, the subsidised and non-subsidised price of LPG stands around Rs7,650 for 170 kg, while for the same, the PNG customer pays Rs7,800, higher by Rs150.
“If LPG is not subsidised, PNG will work out to be much cheaper.
Even if state government reduces VAT on PNG, it will be cheaper than LPG. But both are not seen as happening. Today LPG is marginally cheaper than PNG. Customers are getting imported gas which is 50% expensive than the APM gas supplied in Delhi and other cities of the country,” said the official of Adani.
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