The Car Industry Is Worried About the Increase in CNG Prices

Natural gas CNG (compressed natural gas) was once eye-popping cheap. But recently suddenly its price has increased along with petrol and diesel. One of the reasons is the supply crisis caused by Russia’s war in Ukraine. As a result, the price difference between CNG with the former transport fuels is decreasing. And that’s part of the worried car industry. They have sought the intervention of the Center in the matter.

The Center decides the rate at which producers in India will supply natural gas to distribution companies. According to industry sources, the price of this fuel has increased more than three times from last April to September compared to the same period of the previous year. Last time in those 6 months gas was sold at just $1.79 per MMBTU, this year it has increased to $6.1. From last October to March this year, the rate was 2.9 dollars.

Suppliers of CNG 

CNG Prices
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Producers went on to supply CNG to distribution companies like IOC-Adani Group, Hindustan Petroleum (HPC), and BGC. Increases the cost of buying gas for distribution companies, affecting CNG pumps. For example, the price of CNG per kg at the HPC pump is now 95 rupees. Natural gas is now selling at 89.25 rupees at the pump under BGC. January 1 which was 67.67 rupees. The price of CNG has increased from 78 rupees to 91 rupees per kg at IOC-Adani group pumps in these 9 months.

The Center is advocating the use of alternative fuel vehicles like CNG, and hydrogen in addition to electric vehicles in the country to reduce import costs and pollution. Concerned quarters claim petrol diesel price is on fire. From that point of view, the low price of CNG was a big tool to attract buyers. But now the huge difference between the cost of driving a car on petrol-diesel and the cost of driving on natural gas is gradually decreasing. If this continues, there may be obstacles in the way of increasing its market in the future.

Impact of price hike

The auto industry says demand for CNG vehicles has already had some impact. If the price of fuel rises in the long term, there is a risk of sales shock. Automobile manufacturers’ association SIAM and the country’s largest car maker Maruti Suzuki have requested the Center to intervene in controlling CNG prices.

According to Siam DG Vishnu Mathur, the high price of CNG is a big challenge for the car business. They are waiting for the hope that the government will intervene and cooperate in this matter.

According to Shashank Srivastava, Senior Executive Director (Marketing), Maruti Suzuki, the main reason for buyers to buy this car is the cheaper CNG. It used to have a higher price difference between petrol and diesel. According to them, now the price of CNG has increased, the cost of running a CNG car per kilometer was Rs 1.50 7-8 months ago, now it has increased to around Rs 2.70.