Compressed natural gas set to be cheaper by ₹5-6 per kg

Compressed natural gas (CNG) prices are likely to fall over the next few days as the overall cost of gas has reduced for city gas companies, said industry executives. State-run GAIL will supply natural gas at $8.04 per mmBtu during the second fortnight of May to city gas companies for domestic use and transport, said the executives, who did not wish to be identified. This will help companies cut CNG rates by ₹5-6 per kg, an executive said, adding that the reduction would vary from operator to operator. GAIL's supply price is higher than $6.10 that city gas companies pay for domestic gas but is much lower than the cost they incur in importing gas.

Cheap domestic gas supplies haven't been able to keep pace with rising CNG demand as city gas services have spread across the country and more drivers have switched to CNG vehicles. This has prompted city gas distributors to source pricey imports. Rates in international spot markets have been highly volatile in past eight months and are currently around $22 per mmBtu.