The Petroleum Ministry has stopped fresh allocation of natural gas from domestic fields (field) to city gas distribution (CGD) operators. Sources gave this information. The move by the petroleum ministry has raised ‘apprehensions’ about the viability of the Rs 2 lakh crore investment plan in the sector, with the prices of OCNG and PNG (pipe-supplied cooking gas) hitting a record high. . At the same time, the prices of CNG and PNG (LPG supplied to households through pipes) have reached record levels.
Also read: This share reached Rs 80 from 36 paise, made Rs 1.11 crore to 50 thousand investors in a year
Despite the Union Cabinet’s decision to supply 100 per cent gas to the urban gas distribution sector on priority basis without ‘cut’, the supply to the sector is being done on the basis of the demand level as of March, 2021. Apart from this, the process of allotment of gas based on the average withdrawal of six months is also affecting the city gas distribution operators. The city gas distribution units have requested the ministry to supply gas to the area in the ‘no cut’ category on the basis of the average of the last two months. This will help them to meet the demand of CNG and PNG. Three sources with knowledge of the matter said that the ministry has not done so and has not made any fresh allocation of gas for over a year.
In addition to the reduction in allocation, the price of APM gas for CNG and PNG has been increased from $2.90 per million British thermal unit (per unit) to $6.10 per unit. In this way, the price of APM gas has increased by 110 percent.
With the expansion of CNG network and supply in new areas, the demand for CNG in existing cities has increased exponentially. The lack of allocation from domestic sectors means operators will have to buy imported liquefied natural gas (LNG) whose cost is at least six times higher than domestic rates. As a result of this, the price of CNG has increased by 60 percent or Rs 28 per kg in the last one year. On the other hand, PNG prices have increased by one-third, or about 33 percent.
Also read: New prices of petrol and diesel released, check your city rate
Sources said this has put a question mark on the economic viability of the entire CGD sector. This has raised questions about the feasibility of the Rs 2 lakh crore investment plan for expansion into new cities. The high prices of CNG have brought the cost of this cheap alternative to vehicle fuel closer to that of petrol and diesel. Hence, it is no longer economically viable for consumers to switch their vehicles to cleaner fuel alternatives. The city gas projects assume significance in view of the government’s target of taking the share of eco-friendly natural gas in the country’s energy ‘basket’ to 15 per cent by 2030. Presently the share of natural gas is 6.7 percent.
Sources say that stopping the supply of domestic gas to such projects will put obstacles in the way of achieving this goal. The Petroleum Ministry had issued revised guidelines on August 20, 2014, promising allocation of gas from domestic sectors to urban gas operators every six months based on the assessment of demand for CNG and PNG in a particular Geographical Area (GA). had gone. Despite these guidelines of the Ministry, the gas allocation has not been increased in the review period of April, 2021 and subsequent cycles. Sources said the city gas distribution sector needs 22 million standard cubic meters per day (22 mmscmd) of gas, while they are being supplied with 17 mmscmd.