GAIL slashes prices of CNG across 20 cities
The move have brightened prospects of petrol and diesel rates cut as state-run energy firms are reducing retail prices of fuels ahead of the 2024 general elections
GAIL India on Saturdayannouncedslashing of compressed natural gas prices by ₹2.50 a kg in 20 cities, including Bengaluru, Patna, Ranchi and the Taj Trapezium Zone, brightening prospects of petrol and diesel rates cut as state-run energy firms are reducing retail prices of fuels ahead of the 2024 general elections.
A “substantial reduction” in the prices of CNG was made across India in areas under its operation, GAIL said on Saturday. The price cut ranged from 2.7% to 3.6% in 20 places including Varanasi, Jamshedpur, Bhubaneshwar, Cuttack, Dewas, Meerut, Sonepat, Dehradun, Puri and Adityapur.
GAIL’s decision coincides with the move of three major state-run oil marketing companies (OMCs) -- Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum – reducing cooking gas rates by ₹100 per cylinder for all 360 million customers, as announced by Prime Minister Narendra Modi on Friday.
“The burden of the price cut will be largely borne by OMCs as government gives cooking gas subsidy to only 10.3 crore Ujjwala beneficiaries,” an executive working for an OMC said, requesting anonymity. Ujjwala beneficiaries -- 103 million poor households – get an additional subsidy of ₹300 per 14.2 kg cylinder.
Earlier on Wednesday, Mahanagar Gas Ltd (MGL), and on Thursday, Indraprastha Gas Ltd (IGL), announced CNG rates cut of ₹2.50 per kg. While MGL serve the Mumbai region, IGL serves Delhi and the national capital region. Both firms are promoted by state-run entities. GAIL promotes MGL and IGL is promoted by GAIL and Bharat Petroleum.
“Although announcements happened on different dates, the decisions to cut fuel rates were coordinated. The same could be possible for petrol and diesel in the coming days,” a second person with direct knowledge of fuel pricing by state-run entities said, declining to be named.
The three oil marketers have posted about ₹70,000 net profit in first three quarters of current financial year, as against combined net profit of ₹1,137.89 crore in the entirety of 2022-23, and are expected to make significant profits even in the three months to March as average international crude oil rates are more or less stable, he said. State-run OMCs have not changed pump prices of petrol and diesel for 23 months. IOC pumps of Delhi have kept prices of petrol at ₹96.72 per litre and diesel at ₹89.62.
While India’s monthly average crude oil import cost (Indian basket) ranged between $74.9 a barrel in May 2023 and $93.5 per barrel in September, it was $81.62 in February, according to official data. The average price of the Indian basket was $83.14 a barrel in the first seven days of March, even as the benchmark Brent crude closed at $82.08 a barrel on Friday with a fall of 1.1% on concerns over lower Chinese demand.
OMCs froze petrol and diesel rates on April 6, 2022, to check international oil price volatility and the central government reduced excise duty twice (by ₹13 on petrol and ₹16 on diesel) to protect Indian consumers when average crude oil purchase prices of the Indian basket surged from $73.30 per barrel in December 2021 to $112.87 a barrel in March 2022, and further to $116.01 a barrel in June 2022.
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