NEW DELHI: Gas board orders cuts in rates, charges for CNG & PNG to Delhi consumers; firm may challenge directive
The price of compressed natural gas (CNG) in the capital could come down by 20 per cent and of piped natural gas (PNG) by 10 per cent in the wake of an order on Monday by the Petroleum and Natural Gas Regulatory Board (PNGRB).
Indraprastha Gas Ltd (IGL), the monopoly supplier of both gases in the capital, may have to take a hit of around Rs 1,000 crore. The order has sharply reduced, with restrospective effect, network rates and compression charges. IGL, it is learnt, is looking to challenge it.
PNGRB has directed IGL to reduce prices for Delhi consumers with effect from on Monday after factoring in the reduction in both network rates (levied on CNG, PNG and industrial consumers) and the compression charges on CNG. It has also asked the company to make refunds since the 2008-09 financial year based on the changes, since that was the first financial year of operation for the company after the regulator came into being in October 2007.
An industry official said as the order directed IGL to refund the difference between the network rates and compression charges decided by the board and those levied by IGL from April 1, 2008, IGL will have to refund the amount. A company spokesperson did not comment. He said the order was being studied.
Rakesh Jain, associate director (energy) at Feedback Infra, said IGL would be negatively impacted. He did not quantify by how much.
Prior to the Board’s existence, both network rates and compression charges were decided by the company. PNGRB has now directed IGL to give a break-up of network rate, compression charge and ‘last-mile connectivity’, if any, in each bill.
IGL had proposed to the Board a network rate of Rs 104.05 per million British thermal units and compression charge of Rs 6.66 per kg of CNG. The Board approved Rs 38.58 and Rs 2.75, respectively, bringing these down by 63 per cent and 58.7 per cent. The network rate per kg is expected to be Rs 1.86 against the Rs 5.02 given by IGL, a difference of Rs 3.16. Another Rs 3.91 impact will come in reduction of compression charges. Together, this means a price reduction of Rs 7.07 per kg of CNG from the current Rs 35.45.
Similarly, in the case of PNG, the network rate according to the order is Rs 1.33 per standard cubic metre (SCM) against the Rs 3.59 from IGL. That’s a drop of Rs 2.26 per SCM from the current price of Rs 18.95.
Industry officials said IGL would challenge this order. “IGL made a profit of Rs 874 crore since the fiscal beginning April 2008. It is impossible for the company to refund an amount higher than this. More, the reduction that is being directed will make future business highly loss-making,” said one.