CNG prices in Mumbai may have to be hiked by about Rs 16 per kg and piped cooking gas by Rs 10 after government decided to divert some of its cheaper domestic gas to Gujarat.
The Oil Ministry last month decided to allot the available domestically produced natural gas to all CNG retailers in the country at a uniform price. At present, cheaper domestic gas is mostly allocated to firms in Delhi and Mumbai while those in other cities have to depend on costlier imported gas.
Gas to retailers in Gujarat is being made available by cutting supplies of Mahanagar Gas Ltd (MGL) of Mumbai.
MGL, which sells compressed natural gas (CNG) to automobiles and piped cooking gas to households in Mumbai, last month wrote to the Oil Ministry saying "CNG and domestic PNG prices could be increased by about Rs 16 per kg and about Rs 10 per standard cubic meter to the transport segment and domestic households, respectively."
The company presently gets about 2 million standard cubic meters per day of gas at a price of $4.2 per million British thermal unit. MGL said its supplies will be reduced by about 28 per cent to 1.45 mmscmd after the order is implemented.
Oil Ministry officials said the order to redistribute available domestic gas among all CNG and piped gas retailers will ensure growth of the city gas sector.
Gas supplies to entities in Gujarat was to begin from December 1 but technical issues have delayed it. Gas coming from ONGC's fields are short of the pressure required for the fuel to be pumped into the city gas network.
Officials said the issue is being resolved. The Gujarat High Court had on July 25 last year ordered gas be made available for city gas distribution (CGD) projects in Ahmedabad at the same rate as it was provided in Delhi and Mumbai.
The Supreme Court upheld this order on September 30. The Oil Ministry on November 14 issued guidelines for "allocation/supply of domestical natural gas CGD entities" for sale to automobiles as CNG and households for cooking purposes.
It allocated 6.4 mmscmd of domestically produced gas to meet almost 80 per cent requirement of CNG and PNG in all cities.
Allocation is to be made in proportion to the demand for CNG and PNG in cities, the order said adding presently 8.02 mmscmd of gas is consumed in CGD sector.
Of the 6.4 mmscmd allocated for CGD sector, 5.93 mmscmd would come from fields operated by state-owned Oil and Natural Gas Corp (ONGC) and the remaining 0.47 mmscmd from BG-operated Panna/Mukta and Tapti fields in western offshore.