CNG and PNG prices set to come down; know how, when and to what extent

This news will bring you relief if you operate a CNG vehicle or have a PNG connection in your home. In fact, their rates might decrease soon. There are high hopes that the government's significant action in this area will slow the rise in CNG and PNG costs. 

Less than three months after directing the use of more expensive imported LNG to meet increased demand for automobile fuel CNG and household cooking gas PNG, the ministry switched back to its previous practice of supplying city gas operations with largely domestically produced gas on August 10.
“Use of domestic gas instead of imported fuel will bring down the cost of raw material and ease CNG and PNG rates”, officials said.

The raw material for CNG and PNG is natural gas. This gas originates in the Arabian Sea from fields including Mumbai High and Bassein. Gas is imported in the form of liquefied natural gas (LNG) on ships because domestic supply is insufficient to meet all needs.

As per the oil ministry, the increased allocation will meet 94% of the demand for CNG supplies to automobiles and piped cooking gas to household kitchens in the country and previously about 83-84 per cent of the demand was met and the remaining was met through the import of LNG by GAIL, they said.

The notification also said that the supply of domestic gas to city gas distributor companies will now be on the basis of availability or on the basis of allocation made to GAIL for transport CNG and domestic PNG. The supply was 102.5 per cent as compared to the level of consumption in the previous quarter.

The action comes after a sharp increase in CNG and PNG prices in the nation over the previous year as a result of operators using more expensive imported LNG. Delhi's CNG prices increased dramatically by 74%, while PNG prices increased by 70%.

The government in 2014 included the City Gas Distribution (CGD) to promote cleaner fuel and based on consumption data of the previous six months, the CGD was put on a 'no cut' priority sector and allocation was made twice a year. 

After making such a full allocation in March 2021, the ministry amended the 2014 supply guideline in May 2022 to stipulate that any additional demand over and beyond the amount of the previous year will be satisfied by imported LNG.

According to officials, this year's sharp increase in LNG rates caused a rise in CNG and PNG prices. The price of spot LNG, or current LNG, has increased by more than double in recent months to roughly Rs. 4 per unit in the financial capital.