CNG PNG Price Hike: The government has slightly increased the price of natural gas extraction after two years of no change. From now on, there will be an annual hike of $0.25. While this move benefits oil companies, it may lead to higher prices for CNG, household PNG, electricity generation, and the fertilizer industry.

CNG and PNG Prices Set to Rise

The government has increased the price of domestically produced natural gas by approximately 4%, bringing it to $6.75 per mmBtu, up from $6.50 per mmBtu last month. These new prices will take effect from April 2025. Over the past two years, there was no change in the cost of natural gas production. In 2023, the government had set a cap of $6.50 per mmBtu for two years, with a plan to increase it by a maximum of $0.25 annually from the third year onward. This price hike is expected to impact consumers who rely on CNG and PNG.

For gas extracted from complex fields, the maximum price has been set at $10.04 per mmBtu. In the previous cycle (October 2024 - March 2025), it was slightly higher at $10.16 per mmBtu, indicating a minor decrease.

Who Will Be Affected by the Price Increase?

1. Consumers: City gas distribution companies will now have to purchase natural gas at a higher price, which is likely to lead to increased prices for CNG and PNG.

2. Industries and Fertilizer Companies: Many industries, including fertilizer manufacturers and city gas distributors, use natural gas. With increased costs, their operational expenses will rise.

3. Oil and Gas Companies: Companies engaged in natural gas extraction, such as ONGC (Oil and Natural Gas Corporation) and Oil India, will benefit. These companies extract gas primarily from old oil fields, meaning their revenues will rise due to higher selling prices.

What Does This Mean for Consumers?

In summary, households using PNG, vehicle owners relying on CNG, and businesses purchasing fertilizers should prepare for increased costs in the coming months.

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