Why cooking gas prices hiked sharply in Delhi? Here's why

The prices of piped cooking gas have seen a sharp hike in Delhi-NCR after Indraprastha Gas Ltd. (IGL), which retails CNG and piped cooking gas in the national capital, increased the domestic PNG (piped natural gas) rates by a steep 16.5 per cent with effect from April 1.

The PNG price in Delhi has gone up by Rs 5/SCM, whereas in neighbouring Noida and Ghaziabad, it has been raised by Rs 5.85/SCM, including VAT. The applicable price in Delhi would be Rs 41.61/SCM (including VAT). For Ghaziabad and Noida, the domestic PNG price has been increased by Rs 5.85 to Rs 41.71/SCM.

Why are the PNG prices hiked?

The piped cooking gas prices have been increased after the government raised the input natural gas prices to record levels. The PNG rates have been hiked to partially cover the hike in input gas cost which comes on the back of a surge in gas prices globally.

IGL sources natural gas from domestic fields as well as buys imported LNG. LNG in the spot or current market touched record highs in recent months and on March 31, the government raised the price of gas produced from local fields, such as the nation's largest gas field of Bassein of ONGC, to a record $6.10 per million British thermal unit (mmBtu), effective April 1, 2022, from $2.90 per mmBtu.

This has pushed costs for IGL, necessitating the price hikes. The new price will be effective for the first six months of FY23.

The rate applicable to newer and difficult fields such as the ones of Reliance Industries Ltd in the deepsea KG-D6 block will get $9.92 per mmBtu for April-September as compared to the current $6.13 per mmBtu, according to a notification by the oil ministry's Petroleum Planning and Analysis Cell (PPAC).

These are the highest prices ever paid to Indian gas producers.

The hike in domestic natural gas prices has also jacked up the prices of CNG and other energy products, besides piped cooking gas. Apart from PNG and CNG, natural gas is also used to produce electricity and fertilizers.

The government sets the price of gas every six months -- on April 1 and October 1 -- each year based on rates prevalent in gas surplus nations such as the US, Canada and Russia.

CNG and piped cooking gas supplies in cities come from the gas produced by ONGC.

The price hike will also lead to a rise in the cost of generating electricity but consumers may not feel any major pinch as the share of power produced from gas is very low.

Similarly, the cost of producing fertiliser will also go up but as the government subsidises the crop nutrient, an increase in rates is unlikely.

CNG also costlier

Rising international gas prices have also impacted the prices of CNG, which have been raised by 80 paise per kg in the National Capital Territory (NCT) of Delhi to Rs 60.81 per kg from Rs 60.01, according to the information posted on the website of IGL, which retails CNG and piped cooking gas in Delhi. This is the sixth increase in CNG prices in the last month. In all, rates have gone up by about Rs 4 per kg.

The increase in CNG and PNG prices follows a Rs 50 per cylinder raise in the cooking gas LPG rates.

In Noida, Greater Noida and Ghaziabad, CNG will cost Rs 63.38 per kg, while in Gurugram the price is Rs 69.17 per kg.

A record 137-day hiatus in petrol and diesel price revision ended on March 22. On the same day, the price of a 14.2-kg LPG cylinder was increased to Rs 949.50 in the national capital. In some places, the LPG price has touched Rs 1,000.