CNG And LPG Prices May Increase In October: ICICI Securities

CNG and LPG prices may increase in October: ICICI Securities.

According to a report by ICICI Securities, the prices of CNG and piped LPG in cities like Delhi and Mumbai may increase by 10-11 percent next month as the gas price fixed by the government may increase by about 76 percent.

The government prices natural gas produced by firms such as state-owned Oil and Natural Gas Corp (ONGC) from fields assigned to them on a nomination basis every six months.

Based on rates issued in gas-surplus countries. The next review by the government will be on October 1.

The brokerage house said the price, called the APM or administered rate, will be USD 3.15 per million British thermal units (mmBtu) for the period October 1, 2021, to March 31, 2022, from the current $1.79.

Gas rates from deepwater fields such as Reliance Industries Ltd’s KG-D6 and BP Plc will increase to $7.4 per mmBtu next month.

Natural gas is the raw material that is converted into compressed natural gas (CNG) for use in automobiles as fuel or piped into home kitchens for cooking purposes.

The expected jump in APM gas prices will present a challenge to City Gas Distribution (CGD). This is because their gas cost for CNG and residential piped natural gas will increase.

The increase in APM gas prices will mean a steep hike in prices by IGL (which retails CNG in the national capital and adjoining cities) and MGL (which retails CNG in Mumbai) over the next year.

ICICI Securities said in a report that city gas distributors (CGDs) will have to hike prices by 10-11 percent in October.

As per the trend in the international markets, the APM gas price is likely to be US$ 5.93 per mmBtu from April 2022 to September 2022 and US$ 7.65 from October 2022 to March 2023.

This means that the prices of CNG and piped natural gas will increase by 22-23 percent in April 2022 and 11-12 percent in October 2022.