PNG costlier than subsidised LPG as cooking fuel
Unlike popular belief, PNG is 3% costlier than subsidised LPG
If you thought switching to domestic Piped Natural Gas (PNG) as cooking fuel makes economic sense because it comes cheaper than subsidised Liquefied Petroleum gas (LPG), you need a rethink.
Unlike popular belief, PNG is 3 per cent costlier than subsidised LPG, shows a Business Standard analysis.
This is despite the recent 8 per cent cut in natural gas prices to 4.66 per mmbtu by the government which pulled down the prices of PNG. Before the gas price reduction, PNG was 5 per cent costlier than subsidised LPG. Also, among the transport fuels, Compressed Natural Gas (CNG) has become 27 per cent cheaper than Diesel after the reduction in natural gas prices from 1 April.
The analysis was carried out by converting both the Rs per Liter price of diesel and Rs per standard cubic meter (scm) price of CNG into Rs per million calorie to equalize the fuel units and then looking at the percentage differential in prices before and after the gas price revision announced on 31 March for the six months period ending 30 September.
“The gas price decline and the resulting change in the retail price of CNG and PNG has made these fuels more competitive over their traditional counterparts — Diesel and subsidised LPG. The decline in gas price, thus, comes as a positive for City Gas Distribution (CGD) entities. IGL usually passes on the benefit to consumers while keeping its operating margin intact,” said Salil Garg, Director at research and rating agency India Ratings.
Subsidised LPG is currently priced at Rs 29.4 per Kilogram (Kg) or Rs 25.5 per million calories (considering LPG’s calorific value of 11,500 Kilocalorie per Kg). At the earlier natural gas price of $5.05 per unit, PNG was priced at Rs 25.5 per scm or Rs 26.8 per million calorie – 5 per cent higher than LPG.
After the announcement of the new 8 per cent lower gas price of $4.66 per unit, gas distributor Indraprastha Gas Ltd (IGL) cut down PNG price to Rs 24.90 per scm or Rs 26.21 per million calorie (considering PNG’s calorific value of 9,500 Kilocalorie per Kg) effectively reducing the price differential with LPG to 3 per cent from 5 per cent earlier.
Similarly, non-branded Diesel is currently priced at Rs 48.50 per liter or Rs 54.39 per million carlorie (considering Diesel’s calorific value of 11,500 Kilocalorie per Kg). At the earlier gas price of $5.05 per unit, CNG was priced at Rs 38.15 per scm or Rs 40.16 per million calorie – 26 per cent less than the Diesel’s price for equivalent amount of energy.
After the announcement of the new natural gas price, IGL cut down CNG price to Rs 37.55 per scm. That translates into a price of Rs 39.52 per million calorie (considering CNG’s calorific value of 9,500 Kilocalorie per Kg), marginally increasing the price differential with Diesel to 27 per cent from 26 per cent earlier.
While announcing the cut in CNG and PNG prices on 1 April, IGL had said that at the revised price, the economics in favour of CNG would be over 22 per cent when compared to diesel driven vehicles. Also, CNG now offers nearly 55 per cent savings towards the running cost when compared to petrol driven vehicles. IGL currently caters to over 8 lakh CNG vehicles in the capital including 5.2 lakh private cars.