Oil Minister M Veerappa Moily said the government has decided to raise allocation of natural gas from domestic fields to city gas entities to 100 per cent from current limit of 80 per cent.
This would be done by cutting supplies to non-core sectors like petrochemicals, steel and refineries.
The Arvind Kejriwal-led Delhi government has been looking at legal options to effect a rollback in CNG prices, one of the first promises made by Aam Aadmi Party (AAP).
CNG (compressed natural gas) price was hiked by a steep Rs 4.50 per kg from midnight of December 26 in Delhi. This was the second increase in rates in just three months. Also, the price of cooking gas piped to kitchens was also increased by Rs 5.15 per kg.
The latest government decision would help in reduction of prices of CNG retailed to automobiles in cities like Delhi and Ahmedabad.
It will also bring down prices of piped cooking gas to households as cheaper domestic gas will replace costlier imported LNG that entities were using now.
"Our target is common man... we want to give common man a relief and in a way this is an anti-inflationary measure," the Minister said.
Presently Mumbai sources all of its gas requirement from domestic fields and as such there will be no cut in rates in the city. However, in Delhi, which presently uses as much as 28 per cent of costlier imported LNG, and cities in Gujarat like Ahmedabad which too were heavily reliant on imported fuel, will see a price cut.
"This (move) would lead to reduction in price of CNG and PNG across the country (except in those cities which are already getting 100 per cent domestic gas like Mumbai). The price of CNG in Delhi would be reduced by about Rs 15 per kg (about 30 per cent). There will also be a reduction of about Rs 5 per cubic metres (about 20 per cent) in the price of PNG," Moily said.
While the orders for increasing domestic gas supply to CNG entities were issued today, the decision would take 2-3 days to take a effect as gas firms tie-up and sign new supply agreements.
Indraprastha Gas Limited (IGL), the distributor of CNG in Delhi, had said strengthening of the dollar and increasing dependence on imported regasified-liquid natural gas (RLNG) that costs four times as much as domestic gas necessitated the price hikes.
Hikes in CNG prices, it had said, was also made necessary by a 5 per cent reduction in the allocation of cheaper domestic gas to Delhi and the NCR following a Gujarat High Court order.
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