Mahanagar Gas Limited (MGL) has announced a price increase for compressed natural gas (CNG) in Mumbai and nearby areas. The price has risen by INR 2 per kilogram. This change took effect on November 22. CNG now costs INR 77 per kilogram instead of the previous INR 75.
The company’s last price hike was in July 2024. At that time, MGL increased the CNG price by INR 1.50 per kilogram due to similar cost pressures. The previous increase brought the price to INR 75 per kilogram.
The main reason for the price hike is rising input costs. These include the higher expenses of acquiring natural gas and other operating costs. The decision follows the recent decrease in domestic Administered Price Mechanism (APM) gas supply, which has affected fuel distributors.
The recent APM gas supply reductions have had a big impact on fuel distributors. On October 16, the supply was cut by 21%. A second cut of 20% was announced on November 16. These reductions mean that cheaper APM gas now only meets 40% to 45% of the needs of CGD companies. This is a significant drop from 65% to 70% just a month ago. In FY21, the allocation had reached a peak of 154%.
Due to the lower availability of domestic gas, MGL had also increased prices in July 2024. Other companies also raised prices to manage rising costs. Indraprastha Gas Limited (IGL) also raised CNG prices in Delhi by INR 1 per kilogram, setting the price at INR 75.09 per kilogram in June 2024.
Both MGL and IGL had issued statements talking about the financial strain caused by reduced supply.
As per reports, CGD companies now rely more on market-linked rates, which add to the cost pressures. Despite the increase, CNG is reportedly a cheaper and greener option compared to other fuels.