The federal government has for the second time in a month minimize provides of cheaper domestically produced pure fuel to compressed pure fuel (CNG) retailers, who’ve warned of their profitability being hit.
Indraprastha Gasoline Ltd, which retails CNG to vehicles and piped cooking fuel to households within the nationwide capital and adjoining cities, in a inventory trade submitting stated home provides have been minimize by about 20 per cent efficient November 16.
Beforehand, provides had been minimize by about 21 per cent efficient October 16.
“Based mostly on one other communication acquired by the corporate from GAIL (India) Ltd (the nodal company for home fuel allocation), that is to tell that there was additional discount in home fuel allocation to the corporate efficient from November 16, 2024. The revised home fuel allocation to the corporate is approx. 20 per cent lesser than earlier allocation which can have an adversarial affect on profitability of the corporate,” IGL stated.
IGL will get home fuel allocation for assembly the requirement of CNG gross sales volumes on the pricing mounted by the federal government (presently at $6.5 per million British thermal unit).
The choice to that is to make use of imported fuel, which is twice the home fee.
“The corporate is exploring all choices to deal with the difficulty,” IGL stated.
IGL exploring all choices
Pure fuel pumped from beneath the bottom and from beneath the seabed from websites starting from the Arabian Sea to Bay of Bengal inside India is the uncooked materials that’s became CNG on the market to vehicles and piped cooking fuel to households.
Manufacturing from legacy fields, whose value is regulated by the federal government and that are used to feed metropolis fuel retailers, has been falling by as much as 5 per cent yearly because of the pure decline that has set in.
This has led to provide cuts to metropolis fuel retailers.
Whereas the enter fuel for piped cooking fuel that households get is protected, the federal government has minimize provide of uncooked materials for CNG.
Gasoline from legacy fields used to fulfill 90 per cent of the demand for CNG in Could 2023 and has progressively fallen.
The availability was minimize to simply 50.75 per cent of the CNG demand starting October 16 from 67.74 per cent final month.
Now it has been additional decreased.
Shopping for imported and costlier liquefied pure fuel (LNG) to make up for the shortfall could result in a hike in CNG costs that varies from Rs 4-6 per kg, sources stated.
For now, the retailers haven’t raised CNG charges as they’re engaged with the Ministry of Petroleum and Pure Gasoline to discover a resolution, they stated.
CNG value hike can be a political concern since Maharashtra goes to the polls subsequent week and elections are additionally due in Delhi quickly.
Delhi and Mumbai are among the many largest CNG markets within the nation.
