SC ruling to raise CNG & PNG prices in Mumbai by 20-25%; Delhi unaffected

NEW DELHI: Consumers using natural gas to cook food and run automobiles will now have to pay less than before, especially in Gujarat and Uttar Pradesh, with the oil ministry issuing a directive on Supreme Court’s instructions to distribute cheaper domestic gas to all cities equitably. The move will, however, adversely affect consumers in Maharashtra as their allocation of cheaper gas will come down.

The Supreme Court had rejected the ministry’s plea to overturn Gujarat High Court’s ruling that directed the Congress-led coalition at the Centre to stop discrimination against opposition-ruled states, particularly Gujarat. City gas distribution agencies in the BJP-ruled Gujarat had approached the high court alleging that the central government was supplying cheaper domestic gas to distributors of Delhi and Maharashtra while they were forced to import five times costlier liquefied natural gas ( LNG) to serve their customers, government and industry officials said.

“The oil ministry has already issued an order to supply domestic gas to all city gas distribution agencies equitably. A distribution agency in any city will get domestic gas to meet about 80% of its requirement at a uniform base price,” said an oil ministry official, who did not wish to be named.


Gas distribution agencies will have to meet the balance requirement through imported LNG. Most of the domestic gas is sold at $4.20 per unit while imported gas costs about $20 per unit in the spot market, the official said.

Industry experts estimate that the move will lead to a rise in prices of compressed natural gas (CNG) and piped natural gas ( PNG) by about 20-25% in Mumbai and Pune. But it will help Gujarat-based agencies such as GSPC Gas, Gujarat Gas, Adani Gas, Sabarmati Gas and Charotar Gas to slash fuel prices by 15-20%.

Mahanagar Gas, which supplies gas in Mumbai, meets almost its entire demand from domestic resources. “With new gas distribution guidelines coming in place, we are expected to lose 20-25% of our cheaper gas, which will have to be replaced by expensive imported gas,” said Mahanagar Gas MD VC Chittoda. Consumers around Delhi will remain largely unaffected because their local agency, Indraprastha Gas, already imports slightly more than 20% gas to meet the demand, experts said.

“The impact on IGL can be worked out only once the quantity of domestic gas allocated and the applicable rates are made available,” an IGL spokesman said.

Dhrangadhra Prakruti Mandal and Gujarat Rajya Autorickshaw Federation had initiated the legal battle against the discrimination separately in 2011. Both had demanded an equal share of cheap domestic gas, which was predominantly supplied to Delhi and Mumbai.