Wednesday, 5 February 2014

Government slashes pipe cooking gas, CNG prices by 20-30%

NEW DELHI: The government has slashed the price of piped natural gas for households and CNG for automobiles by 20 per cent to 30 per cent by diverting cheap domestic gas from industrial customers and eliminating costly LNG imports for city networks.
The decision, that will reduces prices to the lowest in two years, would be effective immediately, but prices are bound to rise in April when domestic gas prices will double.

City gas networks will now meet their entire demand from domestic gas. This will bring down prices in every city except Mumbai, which already gets all its gas from Indian fields. "While consumers in Mumbai and Pune get enough domestic gas to meet their entire requirements, other cities import about four times costly gas to meet their demands," oil minister Veerappa Moily told reporters.
Gas users in Gujarat, India's biggest consumer, will gain the most as the state meets its most of its retail demand from costly liquefied natural gas. The state was granted relief by the Gujarat High Court, which ruled that all cities must be treated equally in the supply of cheap domestic gas. This was upheld by the Supreme Court. Moily said the decision was not influenced by the Aam Aadmi party's demand to increase Delhi's quota of scarce domestic gas.
"This debate was on for last 4-5 months. We decided to cut entitlement of some non-core industrial users and meet the need of lakhs of consumers because it is the most clean and green fuel," he said. Following the court order, in November, the oil ministry determined a uniform share of domestic natural gas for all cities, which was fixed at 80 per cent.

But this could not be implemented effectively as taxis and auto-rickshaws in Mumbai and Pune protested any cut in their share. In order to accommodate them the government decided to raise quota for all cities, government and industry officials said. Oil secretary Vivek Rae said the move would also end several court cases in different states, as there is no discrimination in supplying the scarce resource. Several public interest litigations were filed in many courts against the arbitrary supply of natural gas.
The government will cut domestic gas supplies of non-core sectors such as petrochemical plants, steel units and refineries to meet the demand of city gas distribution companies, he said. "But gas supply to small units, where the fuel requirement is lass than 5,000 standard cubic meters per day, will continue," he said.
Bigger units will be allowed to use regassified LNG, which is a costlier option supplied by state-run Gail India. "Prices in Meerut, Kota, Sonipat, Panipat, Lucknow, Bareli, Kanpur and other cities will also drop," Gail chairman BC Tripathi said. Gail is country's biggest gas transporter and it is responsible for supplying gas to Indian cities.
Source : Economic Times

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