Poll in mind, Gujarat delays CNG price hike till December

Even as diesel prices have been hiked and there is a possibility that petrol prices will also go up, CNG (compressed natural gas) and PNG (piped natural gas) prices are unlikely to go up, at least till the end of December.

The state government, which is engaged in a heated war of words with the Centre over allocation of cheaper domestic gas to the state, has asked city gas distribution (CGD) companies against revising CNG prices till assembly elections are over. A recent proposal by GSPC Gas, the CGD arm of state-owned GSPC, to revise CNG prices was turned down by the state government. This was followed by terse calls from the CMO to other CGDs operating in the state ‘advising’ them not to revise gas prices in the next couple of months.

“We have been asked not to revise gas prices till elections are over,” confirmed a senior official of a CGD company.

Officials in the government, however, said that there is nothing unusual about governments resorting to such moves  ahead of elections.

“There is nothing wrong if companies have been asked not to revise gas prices. The Centre has been doing the same as far as fuel prices are concerned,” said a senior government official.
Gujarat is the biggest consumer of natural gas in the country, accounting for over one-third of the total gas consumed. However, CNG consumers in Gujarat pay as high as Rs56 per kilo, while the price is just around Rs40-42 or so in New Delhi and Mumbai. 

Gas is going to be a major political tool in the elections. The Centre has gone on the offensive issuing full page advertisements over gas allocation to the state, while the Modi government has gone to the extent of pointing out mistakes in the ads and issuing detailed clarifications.

While CGD operators are staring at definite losses due to under-recoveries, what has worked in their favour is the cooling of spot LNG (liquefied natural gas) prices.

“From $18 to $19 per Million Metric British Thermal Unit (MMBTU) a couple of months back, spot LNG prices have come down to around $15. This is providing some cushion to CGDs,” said a CGD official.