With global prices of natural gas rising sharply and in India by 40% from October 1, a hike in the price of compressed natural gas (CNG) was only to be expected. Effective midnight of October 3, 2022, Mahanagar Gas announced a price hike of Rs 6 per kilogram in Mumbai, up 7.5%.
This takes the price of CNG to Rs 86 per kg in what is the seventh price hike in the year till date, and also returns to the same price level 46 days after CNG prices were reduced to Rs 80 on August 17. CY2022 till date has seen two CNG price reductions, the last one on August 17 – by Rs 6 per kg – and the previous one – also by Rs 6 a kg – on April 1 (see data table below).
October 5’s Rs 6 hike takes CNG price to Rs 86 per kg in Mumbai and returns to the same level 46 days after CNG prices were reduced to Rs 80 on August 17.
Over a 20-month period, from February 2021 through to September 2022, CNG prices (in Mumbai) have risen by 74%: from Rs 49.40 per kg to Rs 86. Given the global firming up of energy prices, it is likely there could be further price hikes in the future too.
Why the latest price hike?
On October 1, the Oil Ministry hiked natural gas prices to US$ 8.57 per million British thermal units (per mmBtu) from the previous US$ 6.1. This makes for a substantial 40.50% increase, necessitating the latest price hike.
In its communication dated October 4, Mahanagar Gas said: “The price of domestically produced APM gas has been revised by Petroleum Pricing & Analysis Cell (PPAC) with effect from October 1, 2022. The revised price reflects an increase of 40%. Besides, allocation of APM gas to MGL for CNG and domestic PNG segments has also been concurrently reduced by 10% due to which MGL is required to source RLNG at a substantially higher cost in order to cater to the increasing requirement of CNG and D-PNG in MGL’s license areas.”