GAIL India slashes fuel rates up to 12% in 16 cities | Latest News India - Hindustan Times
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GAIL India slashes fuel rates up to 12% in 16 cities

ByRajeev Jayaswal
Apr 09, 2023 06:38 PM IST

According to the latest pricing data, Bengaluru and Dakshina Kannada (a district in Karnataka) fell in the maximum price reduction bracket of ₹7 per unit for both piped natural gas (PNG) and compressed natural gas (CNG)

India’s largest gas marking firm state-run GAIL on Sunday slashed fuel rates up to 12% across 16 locations, including poll-bound Karnataka, effecting the new gas pricing mechanism that made the bulk of domestically-produced natural gas cheaper, benefiting more than 10.50 million households and 5.30 million transport vehicles serviced through over 5,110 gas stations across the country.

The PNG rate fell by 11.96% to <span class='webrupee'>₹</span>51.50 per standard cubic meter (SCM) and CNG by 7.82% to <span class='webrupee'>₹</span>82.50 per kg (PTI Photo)
The PNG rate fell by 11.96% to 51.50 per standard cubic meter (SCM) and CNG by 7.82% to 82.50 per kg (PTI Photo)

According to the latest pricing data, Bengaluru and Dakshina Kannada (a district in Karnataka) fell in the maximum price reduction bracket of 7 per unit for both piped natural gas (PNG) and compressed natural gas (CNG).

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Effectively, the PNG rate fell by 11.96% to 51.50 per standard cubic meter (SCM) and CNG by 7.82% to 82.50 per kg. While CNG is used as a transport fuel, PNG is mainly used for cooking.

Also Read: Petrol, diesel prices on April 9: Check rates in your city

Likewise, price cuts also took place in other areas where GAIL has city gas distribution networks. GAIL Gas Ltd, a wholly-owned subsidiary of GAIL India, on Sunday confirmed the reduction in its domestic PNG prices by 7 per SCM in Bengaluru and Dakshin Kannada and 6 per SCM in all its other geographical areas.

“The new effective domestic PNG Prices is 52.50 per SCM in Dewas, Meerut, Sonipat, Taj Trapezium Zone, Raisen, Mirzapur, Dhanbad, Adityapur and Rourkela,” it said in a statement.

Similarly, CNG prices are also reduced by 7 per kg in Sonipat and 6 per kg in the rest of the geographical areas, it said.

New CNG rates are 85 per kg for Meerut and Sonipat; 92 per Kg for Dewas, Taj Trapezium Zone and Dehradun; 87 per kg for Mirzapur, 91 per kg for Raisen, Dhanbad, Adityapur, Puri and Rourkela, it added.

Other gas utilities, serving different areas, have also slashed rates of the two fuels. Indraprastha Gas Ltd (IGL), which supplies gas in various cities, including Delhi and National Capital Region (NCR), slashed the CNG rate from 79.56 per kg to 73.59 (8.11%) in New Delhi and PNG price from 53.59 per SCM to 48.59 (9.33%) in the Capital from Sunday.

The reduction in PNG and CNG rates is because of natural gas pricing reforms announced by the central government on Thursday, which is based on recommendations of the Kirit Parikh committee, said a government official and an industry expert requesting anonymity. The panel submitted its recommendations on November 30, 2022.

“It was known well in advance that the natural gas pricing mechanism would change from April which would bring relief to gas consumers across the country. However, it also coincides with the Karnataka assembly polls and could benefit the ruling party. But, it should be seen in the larger context of stubborn inflation. Any reduction in energy price would proportionately reduce inflationary pressure on the economy,” said the expert.

Also Read: PNG, CNG prices set to reduce as Cabinet announces new pricing mechanism

Although India’s retail inflation eased marginally to 6.44% in February compared to January’s three-month high of 6.52%, it is still higher than the Reserve Bank of India’s (RBI) upper tolerance limit of 6%.

The Kirit Parikh committee was set up to contain an astronomical jump in domestically-produced natural gas prices because it was based on a formula that was linked to global benchmarks that surged because of geo-political reasons. “Had the previous pricing regime continued, prices would have likely risen,” CRISIL Ratings said in a statement after the Union cabinet tweaked the formula based on the panel’s suggestion. The formula was tweaked as gas prices had surged over 378% at $8.57 per unit in 2023 from the level of $1.79 per unit in 2021.

According to Naveen Vaidyanathan, director at CRISIL Ratings, if the government wouldn’t have changed the formula, gas prices could have risen further to $10-11 per unit for the first half of FY24, “necessitating a price increase, in turn, for city gas distributors to maintain profitability”.

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