Amid the festivities, piped cooking gas consumers may soon get news that may dampen their festive spirits. The prices of piped cooking gas may go up by Rs 6 per unit while Compressed Natural Gas (CNG) prices may be hiked by up to Rs 8-12 per kg. The hike may take place after the government raised the prices of input natural gas to a record high. The government last week raised the prices of gas produced from old fields, called APM gas, to USD 8.57 per million British thermal units from USD 6.1. The rates for gas produced from difficult fields were hiked to USD 12.46 from USD 9.92 per mmBtu.
According to PTI, APM gas makes up for two-thirds of all gas produced in the country and is converted into CNG for automobiles and piped to household kitchens for cooking.
Kotak Institutional Equities said APM gas prices are up nearly 5x in just a year – from USD 1.79 per mmBtu till September 2021 to USD 8.57. For each USD per mmBtu gas price rise, city gas distribution (CGD) entities need to raise the CNG price by Rs 4.7-4.9 per kg.
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“For USD 2.5 per mmBtu price rise, and also for recent currency weakness, CGDs will need an immediate CNG price increase of Rs 12-14 per kg,” it said.
According to ICICI Securities, piped cooking gas, called PNG, CNG prices will need to be raised by Rs 6.2 per standard cubic meter and Rs 9-12.5 per kg to fully pass on the impact of these high input costs. “At best, we see only a slow gradual pass-through of these costs over the third quarter (October to December),” it said.
Jefferies said Indraprastha Gas Ltd will need to raise CNG price by Rs 8 per kg while Mahanagar Gas Ltd will have to increase prices by Rs 9.
Kotak said there is a serious need to revisit the domestic gas price formula and introduce floor/ceiling prices method. ICICI said the Kirit Parikh Committee has been asked to review the pricing formula.
(With PTI inputs)