The government's decision to double natural gas prices from April 2014 will translate into an increase of Rs 8.20-Rs 11.72 per kg in compressed natural gas (CNG) rates in Delhi and Mumbai.
CNG in Delhi currently costs Rs 41.90 per kg and the same in Mumbai is priced at Rs 35.95.
The government had in late June decided to price all domestically produced natural gas at an average of global hub rates and cost of imported LNG. Accordingly, gas price is expected to be in the range of $8.2 to 8.4 per million British thermal unit (mBtu) in April as against the current $4.2.
"If it is presumed that the city gas distribution entity is operating entirely on domestic gas, the impact of $1 per mBtu increase in price of domestic gas would result in a price hike of Rs 2.93 per kg of CNG," Minister of State for Petroleum and Natural Gas Panabaaka Lakshmi said.
While Indraprastha Gas Ltd, the CNG supplier in New Delhi, sources 70 per cent of its needs from domestic fields, Mahanagar Gas Ltd buys almost all of its gas from domestic producers. Also, CNG retailers in Gurgaon and Faridabad source almost all of their gas needs from domestic fields.
For cities like Mumbai, the $4 per mBtu hike in natural gas price will translate into Rs 11.72 per kg increase while in Delhi the increase may be about Rs 8.2 per kg.
Lakshmi also said a $1 per mBtu increase in gas price would result in $24.893 per tonne hike in urea production cost. This additional production cost would be the increase in subsidy the government paid on urea.
"So long as the MRP of urea is not increased by the government, there will be no impact on the farmers," she said.
On power, a $1 per mBtu increase in gas cost would result in cost of electricity generation going up by 45 paisa per unit.
"The impact of increase of gas price and likely measures to minimise the burden on power sector is being carried out by Ministry of Power," she added.