Compressed natural gas (CNG) prices in the national capital were raised by ₹2 per kg on Tuesday, the third increase in less than two weeks, with analysts warning of further hikes of up to ₹2-3 per kg for Delhi and over ₹3 per kg for Mumbai as city gas distributors struggle to absorb soaring LNG prices, higher freight costs and a weakening rupee triggered by the West Asia conflict.
With the latest revision, CNG prices in Delhi rose to ₹83.09 per kg from ₹81.09 earlier, taking cumulative increases since May 15 to ₹5 per kg.
Indraprastha Gas Ltd (IGL), the country’s largest city gas distributor, said CNG prices in Noida and Ghaziabad have risen to ₹91.70 per kg, while rates in Gurugram increased to ₹88.12 per kg.
The latest revision follows a ₹2-per-kg hike on May 15 and another ₹1-per-kg increase on May 23.
The increase in CNG prices also comes alongside sharp petrol and diesel price hikes by state-run oil marketing companies. Petrol prices have risen by ₹7.35 per litre and diesel by ₹7.53 per litre in four rounds of revisions since May 15.
Despite the increase in transport fuel prices, piped natural gas (PNG) used for domestic cooking remained unchanged at ₹49.59 per standard cubic metre in Delhi. In Mumbai, PNG prices continue at ₹51.50 per scm.
After the Iran war disrupted energy supplies, the government prioritised available gas supply to domestic households. Rates for PNG for domestic cooking were kept unchanged.
Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA Ltd, said current CNG price hikes still remain lower than the actual increase in input costs faced by city gas distribution companies.
“The hike till date in prices of CNG is lower than the impact on contribution margins of CGD entities and accordingly there could be future price hikes,” Vasisht said.
He added that current spot LNG prices, measured through the Japanese Korean Marker (JKM), stand at around $18-19 per mmbtu.
Vasisht said higher CNG prices would increase passenger transport and freight costs, though natural gas carries relatively low weightage in the consumer price index.
Harshraj Aggarwal, Energy Lead Analyst, Institutional Equities, YES Securities, said city gas distributors were aggressively passing on higher input costs.
“CGD companies are aggressively passing on surging pooled input gas costs and a depreciating Indian Rupee, both triggered by supply disruptions along the Strait of Hormuz amid the worsening West Asia conflict,” Aggarwal said.
He added that “maybe another ₹2-3/kg for IGL and more than ₹3 for Mahanagar Gas Ltd” could be expected if global LNG prices remain elevated.
Analysts said the running-cost advantage of CNG over petrol and diesel is beginning to narrow as transport fuel prices continue to rise amid elevated crude oil and LNG prices.
In Mumbai, where rates were last revised on May 14, CNG currently costs ₹84 per kg.