Govt hopes CNG,PNG cos may not pass entire burden to customers

New Delhi, May 20 (PTI) The Indian government Thursday
hinted that companies retailing CNG and piped natural gas in
metros may not pass on the entire impact of the over two-fold
hike in natural gas prices to consumers.
Rates of compressed natural gas (CNG) sold to automobiles
in Delhi and Mumbai will have to be raised by about Rs 6 per
kg, while piped gas for households would have to be hiked by
about Rs 4 per cubic metre because of the government's
decision to raise input gas prices to Rs 7.5 per cubic metre.
"We sincerely hope that passing on the entire burden (of
increased input cost) may not be necessary for companies
retailing CNG and PNG to automobiles and households in Delhi
and Mumbai," India's Oil Secretary S Sundareshan told
reporters here.
Indraprastha Gas Ltd (IGL) in Delhi and Mahanagar Gas Ltd
(MGL) in Mumbai are the only city gas companies in the country
that buy government-controlled gas, called APM gas, the price
of which was raised Wednesday.
"These companies are majority owned by oil PSUs and the
government is the largest shareholder in these oil PSUs. So we
hope the companies will take a considered view," he said.
Both IGL and MGL have so far remained tight-lipped about
passing on the increase in natural gas prices to consumers.
The Cabinet Wednesday hiked the price of gas sold to
power, fertilizer and city gas projects from Rs 3,200 per
thousand cubic metres (USD 1.79 per million British thermal
unit) to Rs 6,818 per thousand cubic metres (USD 3.818 per
mmBtu). After adding royalty, the price for user industries
would be Rs 7,500 per thousand cubic metres (Rs 7.5 per cubic
metre) or USD 4.2 per mmBtu, at par with the rate at which
Reliance Industries sells gas from its KG basin fields.
He said the decision would come into effect once it is
notified in the next few days. It would also lead to a rise in
fertilizer production costs and power generation tariffs.
Fertilizer prices will not be increased, as the
government subsidises the sector. But the decision would
result in the fertiliser subsidy rising by Rs 3,500 crore.
"The government stands to gain (in royalty and taxes) an
amount larger than this subsidy payout," the Secretary said.
Sundareshan said the increase in power tariffs would be
marginal, as only 11 per cent of the total electricity
generated in the country was from gas-based power projects and
of these, only one-third use APM gas. CNG in Delhi currently
costs Rs 21.90 per kg. State-owned ONGC and OIL, which produce
APM gas, would gain about Rs 5,000 crore and Rs 700 crore in
revenues because of the gas price increase.
State gas utility GAIL India, which has been allowed to
charge Rs 200 per thousand cubic metres or 11.2 cents per
mmBtu as marketing margin would gain Rs 200 crore in revenues
annually, he said. MORE PTI ANZ
RDM


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