Govt diverts gas from industries to IGL, MGL to balance CNG, cooking gas rates

The oil ministry in a notification issued on Wednesday amended an earlier order to increase the allocation of domestically produced gas to city gas operators.

The allocation for the city gas operators like IGL and MGL has increased from 7.5 million standard cubic meters per day to 20.78 mmscmd.

As per the oil ministry, the increased allocation will meet 94% of the demand for CNG supplies to automobiles and piped cooking gas to households in the country.

Earlier, about 83% of the demand was met and the remaining was met through the import of LNG by GAIL.

City gas operators complained against the mechanism as it meant using high-priced imported LNG, which led to frequent CNG and piped natural gas price hikes, they said.

Under the previous dispensation, GAIL would average out the price of domestically available gas with the LNG and supply fuel at a pooled price. This price for the current month came to $10.58 per million British thermal units.

After the amendment, the gas price may come down to $7.5.

GAIL will make an increased allocation to the city gas operators by cutting supplies from LPG and petrochemical plants.

This month, the price of cooking gas piped to household kitchens in the national capital and adjoining cities was hiked by ₹2.63 per unit.

At present, Piped cooking gas cost ₹50.59 per standard cubic meter. In Mumbai, Mahanagar Gas Ltd hiked CNG price by ₹6 per kg and PNG by ₹4 a unit.

Domestic production of natural gas is insufficient to meet demand and India imports roughly half of its needs in the form of liquefied natural gas (LNG).

While the price of domestically produced natural gas was increased to USD 6.10 per million British thermal units for the six-month period beginning April 1, international LNG rates shot to record high in the aftermath of Russia’s invasion of Ukraine. LNG in the spot or current market currently costs upwards of $30.

GAIL mixes about 2.5-3 million standard cubic meters per day of LNG with volumes available from domestic fields for supplying city gas operators like IGL and MGL. The pooled rate is fixed every month. For August, the pooled price is $10.52 per mmBtu, up from $8.95 in the previous month.

First article