Now, brace for 5% gas price hike soon

After the hike in petrol prices, there is more bad news for consumers — the prices of natural gas are also set to be revised. Like in the case of petrol, the reason for the hike in gas prices will also be the weakening rupee, which has weakened by seven per cent in less than a month.

Gas prices in Ahmedabad, which are already the highest in the country, are poised to go up by around 5%, say industry sources. In the case of Compressed Natural Gas (CNG), which is used in vehicles, the hike could be around Rs3 per kg. CNG is currently sold in Ahmedabad at Rs63.80 per kg, which means that the price could be in the region of Rs66 – 67 a kg once the prices are revised. “A hike in gas prices is inevitable,” said a CGD official, requesting anonymity.

The rupee has depreciated by seven per cent against the dollar in one month alone, which has eaten away into the profit margins of city gas distribution companies, leaving companies with no other option but to revise prices, he added. Apart from CNG, prices for natural gas for residential and other categories of consumers will also be hiked, though the quantum of hike could vary from one segment to another. City gas distribution companies in Ahmedabad and Gandhinagar had last revised CNG prices on April 18. The price was hiked from Rs60.15 per kg to Rs63.80 per kg. At the time, the dollar was quoting at Rs55, but it is now in the region of Rs58, after touching lows of Rs59 last week.

“The price revision in April was based on the dollar remaining steady at Rs55. However, things have gone from bad to worse since. The sharp depreciation of the rupee is badly hurting all CGDs,” said an official of another CGD. A CGD operator said that there has been slight softening in spot gas prices in the last few weeks, which is providing some relief to them.

“However, the decline in gas prices is not adequate to make up for the increased cost of gas on account of rupee depreciation,” he said.
CNG price in Ahmedabad has risen by more than 66% in just about two years. CNG was selling at Rs38 per kg in May 2011, and crossed Rs40 for the first time in June. The price rose to Rs50 per kg in April of 2012. It crossed Rs60 per kg in January 2013, and was last revised to Rs63.80 in April.