Indraprastha Gas Ltd (IGL) may raise Compressed Natural Gas (CNG) prices in the national capital by Rs 5.60 per kg to Rs 27.50 a kg following the government's decision to more than double the price of natural gas.
IGL board, over the weekend, deliberated upon the impact of the government's decision to raise natural gas prices from Rs 3.2 per cubic meter to Rs 7.5 per cubic meter (USD 4.2 per million British thermal unit) and decided to pass on the hike to consumers, a source in the know of the development said.
The decision to more than double the prices of natural gas raised the cost of input raw material for IGL and Mahanagar Gas Ltd - the firm that retails CNG and piped gas in Mumbai. MGL, too, is mulling raising CNG and piped gas prices in line with the hike being contemplated by IGL.
Sources said the impact of the decision would be about Rs 80 lakh a day on IGL, the sole supplier of CNG to automobiles and piped natural gas to households in Delhi.
CNG rates would be raised once the government notifies the natural gas price by next week. "In all probability, the hike will be effective from June 1," he said.
IGL currently sells CNG at Rs 21.90 per kilogram. Piped natural gas price is likely to be raised from Rs 15.92 per cubic meter to Rs 16.85 per cubic meter, making it almost at a par with the rates at which liquefied petroleum gas (LPG) cylinders are sold.
Industry sources said despite the price hike, CNG would give 28 per cent saving over current diesel rates and 58 per cent over petrol. Auto fuel prices are due for a revision next month and if that happens, the savings on CNG would rise.
Prior to the price hike, CNG gave 40-41 per cent better fuel efficiency than diesel and 67 per cent saving over petrol. Even after the hike, CNG in Delhi will be the cheapest fuel in the country.
IGL in Delhi and MGL in Mumbai are the only city gas companies in the country that buy government-controlled gas, called APM gas, the price of which were raised last week.
APM gas makes up for 90 per cent of the fuel that IGL buys. It buys about 2 million standard cubic meters per day of APM gas from state gas utility GAIL India and the rest 0.2 mmscmd from Reliance Industries.