New Delhi: The government has cut the supply of cheap gas produced in the country to city gas companies that retail CNG by up to 20 percent. Experts believe that if the companies want to maintain their profits, they will have to increase the price of CNG by Rs 5 to Rs 5.5 per kg. If this happens, the sale of CNG vehicles may slow down.

Increase possible after assembly elections

However, it is also being said that the increase in CNG prices can be postponed till the assembly elections in Maharashtra and Jharkhand. Indraprastha Gas Limited (IGL) and Mahanagar Gas Limited told the stock markets that the supply of domestically produced gas has been reduced. The price of this gas is almost half the price of imported gas.

What did IGL say in the information given to the stock market

Let us tell you that in the information given to the stock market, IGL said that the company gets domestic gas to meet the requirement of CNG sales quantity at the price fixed by the government (6.5 dollars per MBTU), but according to the information received from the nodal agency GAIL India, there has been a big reduction in the domestic gas allocation to the company since October 16.

Why might the price of CNG increase?

IGL said its revised domestic gas allocation is about 21 per cent less than the previous allocation, which will impact its profit. Mahanagar Gas Limited (MGL) said its allocation for CNG has been reduced by 20 per cent compared to the previous average quarterly allocation. The company is considering new options to meet this shortfall.

CNG prices reduced in Bihar

Recently, the people of Bihar got a gift. The state government announced a huge reduction in the VAT rate on PNG-CNG. A minister of the state government had said that till now VAT was being collected on natural gas at the rate of 20 percent. Now this rate will be between 12.5 to five percent. At the same time, the rate of VAT on PNG for domestic and commercial use has been reduced from 20 percent to 12.5 percent. The rate of CNG for motor vehicles will also now be 12.5 percent instead of 20 percent.