New Delhi : The government has slashed CNG (compressed natural gas) prices by Rs. 15/kg, or nearly 30 per cent, with immediate effect. Prices of piped natural gas or PNG have been cut by Rs. 5 per cubic metre, or nearly 20 per cent.
The decision to cut rates comes at a time when the government is struggling to rein in its fiscal deficit at 4.8 per cent of the GDP. Fiscal deficit in the first three quarters has inched closer to the budgeted target for the whole year.
The surprise decision to cut CNG prices has come on the heels of last week’s Cabinet decision to raise the quota of subsidised LPG per household from nine to 12 cylinders a year. The decision is expected to inflate the government’s subsidy bill by Rs. 5,000 crore.
Prices of CNG in the national capital had been hiked by Rs 4.50 last month after retailers such as Indraprastha Gas Ltd were forced to buy a fifth of their gas requirements from overseas. The price increase led to protests from the newly elected Aam Aadmi Party-led government in Delhi as well as autorickshaw operators, who had called a maha-panchayat this week to decide on a possible strike.
Oil Minister M Veerappa Moily said the government has now decided to meet all the requirements of CNG and piped cooking gas retailers in the country from domestic fields, sparing them the need to buy costlier LNG (liquefied natural gas).
There will be no cut in rates in Mumbai, which gets all its gas requirements from domestic fields. However, in Delhi, which presently uses as much as 28 per cent of the costlier, imported LNG, and cities in Gujarat such as Ahmedabad, which too were heavily reliant on imported fuel, will see a price cut.
Asked if the price cut was to do with improving Congress’ prospects in the coming general elections, Moily said, “This debate (to supply 100 per cent domestic gas for city distribution) has been on for the past four-five years. It has nothing to do with the elections.
“Our target is always to benefit the common man. If it helps the common man, we are happy. If some political party also stands to benefit, it is incidental,” he said.
Moily said allocation of gas from domestic fields to city gas entities has been increased to 100 per cent from the current limit of 80 per cent. “We want to give common man relief and in a way this is an anti-inflationary measure,” the minister said.