Gas supply cut to city retailers may hike CNG prices by ₹4-6/Kg, govt urged to cut excise duty

The government has reduced the supply of cheaper domestically produced natural gas to city retailers by up to 20%, a move that may result in a ₹4-6 per kg hike in CNG prices unless excise duty on the fuel is cut. The price increase could impact CNG markets in Delhi and Mumbai, just ahead of upcoming state elections in Maharashtra and Delhi. City gas retailers, who rely on domestically produced gas for CNG, have seen supplies drop from 67.74% in September to just 50.75% of their demand as of October 16. The reduction forces retailers to use more expensive imported liquefied natural gas (LNG), which costs nearly double the price of domestically produced gas.

Retailers are engaged in talks with the Ministry of Petroleum and Natural Gas to find a solution, with one possible remedy being a reduction in the 14% excise duty on CNG. A cut in excise duty could prevent the price increase from being passed on to consumers. The supply cut follows a decision to restore gas to ONGC’s petrochemical plant OPaL, which required reallocating domestic gas originally intended for city gas retailers.