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CNG May Get Costlier By Rs 8-12 Per Kg, PNG By Rs 6 Per Unit: Analysts

The price of gas has increased by up to 40 per cent, after which the price of CNG and PNG is bound to increase

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After the record increase in the prices of natural gas, CNG may become costlier by Rs 8-12 per kg, while the price of cooking gas (PNG) can be increased by Rs 6 per unit, analysts have predicted. From October 1, the rates of natural gas have increased, due to which the rate of CAG and PNG can be seen.

The price of gas has increased by up to 40 per cent, after which the price of CNG and PNG is bound to increase. There is a big crisis in the energy sector all over the world, especially in Europe. After the Russia-Ukraine war, the supply of gases is being seen very adversely and India is also not untouched by it.

However, there is another reason too behind the inflation of gases in India. The government last week raised the payment rate for gas extracted from old gas fields to USD 8.57 per unit from the current USD 6.1 per million British thermal unit (per unit). At the same time, the price of gas extracted from difficult areas has been increased from USD 9.92 to USD 12.6 per unit. On the basis of this rate, about two-thirds of the gas produced in the country is sold.

Natural gas is a major raw material for making fertilisers as well as for generating electricity. It is also converted into CNG and piped (PNG) is also used for cooking food in the kitchen. Kotak Institutional Equities said the prices of gas produced from old gas fields have increased nearly five times in just one year. Its price had risen from USD 1.79 per mmBtu in September 2021 to USD 8.57 in September 2021.

For every dollar increase in mmBtu gas price, city gas distribution (CGD) entities have to increase the price of CNG by Rs 4.7 to 4.9 per kg. According to ICICI Securities, CNG and PNG prices would need to be increased by Rs 6.2 per standard cubic meter and Rs 9 to 12.5 per kg to completely offset the impact of higher raw material cost.

Jeffries said Indraprastha Gas, which retails CNG and PNG in the national capital, will need to increase the price of CNG by Rs 8 per kg, while Mahanagar Gas, a retailer in Mumbai, will have to hike prices by Rs 9.

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