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Poll effect? Government cuts CNG, PNG prices by raising domestic gas supply

Tuesday, 4 February 2014 - 10:07am IST | Place: New Delhi | Agency: DNA

With the Lok Sabha elections round the corner, the UPA government is leaving no stone unturned to bring down the fuel prices in the country.

It has cut the price of compressed natural gas (CNG) by 30% and piped natural gas (PNG) by 20% in Delhi.

The decision comes days after the government increased the cap on subsidised LPG cylinders from nine to 12 per year.

The CNG and PNG price cut was effected by increasing the supply of domestic natural gas to state gas distribution companies like Indraprastha Gas. Earlier only 80% of the demand of these companies was met through domestic supply, while the rest used to be imported. Now, the government has said that the quota will be increased to 100%. This will be done by reducing supply to non-core sectors like petrochemicals & refineries and steel.

“This would lead to reduction in price of CNG and PNG across the country (except in those cities which are already getting 100% domestic gas like Mumbai). The price of CNG in Delhi would be reduced by about Rs 15 per kg. There will also be a reduction of about Rs 5 per cubic metre in the price of PNG,” said M Veerappa Moily, Union petroleum and natural gas minister. He said, “Our target is common man... we want to give the common man a relief and in a way this is an anti-inflationary measure.”

While the orders for increasing domestic gas supply to CNG entities were issued on Monday, the decision would take 2-3 days to take effect as gas firms have to sign new supply agreements. Prices could come down in Ahmedabad, Sonepat, Meerut, Bareilley, Indore, Surat and Hyderabad.

Moily urged states to lower or abolish the value added tax.

—With inputs from Cogencis

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