Even as the natural gas prices have been increased by nearly 10 per cent for H1FY20, impact on domestic consumption would be limited considering growing demand for CNG vehicles and PNG connections, a report said. A 9.8 per cent rise in natural gas prices will increase the WPI directly by 0.05 per cent which is not very significant, CARE Ratings said.
Even as the natural gas prices have been increased by nearly 10 per cent for H1FY20, impact on domestic consumption would be limited considering growing demand for CNG vehicles and PNG connections, a report said. In view of the current volatility in crude oil prices, the number of CNG vehicles and PNG connections have surged lately. Since CNG is 60 per cent cheaper than petrol and 45 per cent cheaper than diesel, while PNG costs 40 per cent lower against LPG, the demand is only surging, CARE Ratings said. Interestingly, PNG rates are nearly equal to the subsidised LPG based on prices in the national capital, it added.
The government is also looking at boosting natural gas usage, in place of coal, considering rise in pollution levels lately, similar to what China has been doing, it noted. China has been shifting its focus to gas-based plants, reducing dependence on coal in the last few years to control the rising menace of air pollution in the country.
The government recently hiked the natural gas prices by 9.8 per cent per cent, fourth consecutive rise, for the next six month period, according to the New Domestic Gas Policy. The rates have been revised upwards for April-September at $3.69 per million metric British thermal units (mmBtu) as compared to the last six months of the previous fiscal.
The rates were fixed at $3.36 per mmBtu in the last period by the Narendra Modigovernment. A 9.8 per cent rise in natural gas prices will lead to a rise in the WPI directly by 0.05 per cent which is not very significant, CARE Ratings report said.
The increase in natural gas prices is always expected to impact consumers as CNG (compressed natural gas) is used as auto fuel, and PNG (piped natural gas) in households as cooking gas.
The New Domestic Gas policy, 2014, suggests revising the natural gas prices in every six month period.