Overview
Mahanagar Gas Limited (MGL) has announced a price revision for compressed natural gas (CNG) and domestic piped natural gas (PNG), effective from September 1. The company has increased CNG prices by Rs 2 per kg and domestic PNG rates by Rs 1 per standard cubic meter (SCM), attributing the move to a rise in input gas costs due to the ongoing crisis in the Middle East.
The revised CNG price in and around Mumbai now stands at Rs 88 per kg, with the new rates coming into effect from midnight on August 31, or September 1, according to an official statement from MGL.
Reason for the Hike
In its statement, MGL said, "In view of the ongoing crisis in the Middle East, which has resulted in a significant increase in input gas prices linked to international indices, MGL has announced a revision in the prices of CNG."
The company noted that there is "significant demand" for CNG and that a major portion of the input gas for its CNG segment is being met through imported spot Regasified Liquefied Natural Gas (RLNG), where prices are higher. The increase in international gas prices has forced MGL to source RLNG at higher prices, resulting in a considerable increase in input costs.
MGL stated that the Rs 2 per kg increase will only partially offset the higher input costs, and that the revision is necessary to help maintain a steady and sustained supply of CNG to its customers.
Impact on Consumers
The price revision will have a direct impact on a large number of motorists and commercial vehicle operators dependent on MGL's network. Around 13 lakh CNG vehicles across Mumbai, Thane, Raigad, Ratnagiri, Latur and Dharashiv in Maharashtra, as well as Chitradurga and Davangere in Karnataka, are affected by the increase.
On the domestic PNG front, the same jump in input costs has resulted in a Rs 1 hike per SCM of gas for the 30 lakh domestic consumers in the region.
Context
The announcement comes days after Indraprastha Gas, MGL's peer serving the national capital region and surrounding areas, hiked CNG prices by Rs 3.89 per kg to Rs 86.98 per kg due to a rise in input costs.