The Indian government has accepted suggestions of the Kirit Parikh Panel on gas pricing and therefore, decided to reduce prices of compressed natural gas (CNG) and piped natural gas (PNG) across the country. Mumbai shall see CNG cost drop to Rs 79 per kg from Rs 87 while PNG shall be priced at Rs 49 per scm, down from Rs 54. This has been welcomed by experts in the energy sector. Reducing prices is expected to make gas a more attractive fuel option and increase the demand for gas in India.

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During COVID-19, gas prices fell globally to multiyear low levels but after the Russia-Ukraine war, prices reached record high levels and the cost pressure on city gas distribution companies was passed on to consumers. And this is the reason why the government set up the Kirit Parikh Committee to change the way gas prices are calculated.

In an interview with CNBC-TV18, Kirit Parikh, Chairman of Integrated Research and Action for Development said the government has accepted the same ceiling and floor that they had indicated earlier, resulting in reduced prices of CNG and PNG. As a result, consumers will now pay lesser prices for CNG and PNG.

Also Read | Your piped gas and CNG will cost less now, here is what has changed

He said, “Because of the ceiling of $6.5 per million Btu (British Thermal Unit), Administered Pricing Mechanism (APM) gas is now at $6.5, which is less than the current prevailing price of more than $8. So, consumers will get a cheaper price for the PNG and CNG supplies.”

Also Read | Government defends gas price cap; says city gas distributors need to share their 'super-high profits'

Meanwhile, Harshvardhan Dole, Vice President-Institutional Equities at IIFL said that the cut in CNG prices had made the use of gas as fuel more attractive as compared to petrol and diesel. He added that earnings for upstream companies are extremely sensitive and that there could be an 8-9 percent cut for Oil India and ONGC.

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First Published:Apr 10, 2023 11:48 AM IST