India’s Govt doubles price of nat gas

The government has doubled the price of natural gas produced by ONGC and Oil India from nomination blocks that will make the fuel used in automobiles and households in Mumbai and National Capital Region.

“The price of compressed natural gas (CNG) may increase by 20%, but will depend from city to city,” said joint secretary in the ministry of petroleum & natural gas Apurva Chandra.

The impact on piped natural gas (PNG) will be difficult to ascertain as it is linked to LPG prices, he said. CNG is used in gas-run automobiles while PNG is used in households for cooking purpose.

A senior executive of a gas utility firm said “the consumer will have bear the impact of this price increase. It will be in the range of 20-35% depending on cities.”

“The fuel will, however, be cheaper for consumers compared to diesel,” he said requesting anonymity as the company could not calculate exact quantum of price hikes.

“Companies like IGL (Indraprastha Gas Ltd) and MGL (Mahanagar Gas Ltd) will certainly pass on the impact to consumers for their survival but the quantum will not be the 100% jump as in case of APM gas price,” Scope director general and former Gail chairman & managing director UD Choubey said.

The government has decided to protect customers in the North East by providing a 40% subsidy, information and broadcasting minister Ambika Soni said announcing the Cabinet decision to raise fuel prices.

The move will certainly help companies like OIL and ONGC and incentivise them to produce more natural gas, Dr Choubey said. As per an initial calculation, ONGC may be able to save a revenue loss of Rs 5,000 crore in this current year that will boost its bottom line proportionately. The company is schedule to announce its annual result for 2009-10 on next Friday.

Times of India