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Old 26th December 2013, 22:14   #1
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Default CNG Price hike by Rs 4.50 in Delhi

IGL announced 10% hike in CNG price. In Delhi the price of CNG is now Rs.50.10/kg, where as Diesel is Rs. 53.78/L. CNG @ one point of time used to be the cheapest fuel, after this price hike will loose its complete advantage.

This 10% increase by IGL will indirectly impact alteast 15% to my pocket, as nearly all the commercial vehicles for their last mile connectivity run on CNG.

This will be also a big jolt to MSIL who have invested alot on CNG cars R&D.

This negligible price difference b/w CNG & Diesel vehicles, will gain the tilt the balance in favour of Diesel vehicles.

Slightly off topic, but this price hike also makes me think CNG shop/fitters across Delhi NCR, what will happen to them? Will consumers still convert their car on CNG? Perhaps NO!

By the way i also own a CNG car

Last edited by amitpunjani : 26th December 2013 at 22:17. Reason: Typo
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Old 26th December 2013, 22:31   #2
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Default Re: CNG Price hike by Rs 4.50 in Delhi

Mod Note : There are several spelling & grammatical errors in your posts. This negatively affects the forum experience for other readers.

Kindly ensure that you proof-read your posts prior to submission. Also, it would be a good idea to use spell-checkers.

Last edited by GTO : 27th December 2013 at 12:28.
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Old 26th December 2013, 22:36   #3
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Default Re: CNG Price hike by Rs 4.50 in Delhi

Rs. 50/kg for CNG?

Though there is still the difference of Rs. 20 between prices of CNG & petrol but slowly with each hike this will further shrink and converting a petrol car to CNG or buying a factory fitted CNG car will not be logical then.

Last edited by GTO : 27th December 2013 at 12:29. Reason: Quoted post deleted
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Old 26th December 2013, 23:14   #4
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Default Re: CNG Price hike by Rs 4.50 in Delhi

CNG was supposed to be the clean, green and economical fuel. But the frequent and seemingly arbitrary price hikes have rendered it unattractive. I see no point in paying 50-70k extra, loosing warranty, loosing boot space and then waiting in queues for a refill every other day for this little cost benefit.

5 years ago, CNG cost around Rs19/kg in Delhi. I wonder what is the explanation for gas prices rising by over 2.5 times in such a short amount of time. Even petrol never rose as much despite deregulation.
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Old 26th December 2013, 23:24   #5
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Default Re: CNG Price hike by Rs 4.50 in Delhi

A 10% increase at one go is a big blow to the common man especially those who rely on public transport and use CNG vehicles. Fares are going to increase with immediate effect.

People will stop buying CNG cars and would switch to diesel variants now with the wafer thin price difference between the two fuels.

Govt of India should have kept CNG prices at check in order to promote the usage of clean fuel. Why does the authorities end up shooting their foot with their own gun. On one hand, they will talk about clean environment and on the other hand they are doing whatever it takes to kill that.

Indian government spend crores in raising awareness on environment issues, organising various camps, meetings and seminars. Trips across the world are made to learn and understand how to best protect our environment and then they allow a decision, which impacts the life of a common citizen and is in complete contrast to what is said and planned.
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Old 27th December 2013, 00:00   #6
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Default Re: CNG Price hike by Rs 4.50 in Delhi

This is sad but not entirely surprising.

Quote:
Originally Posted by mints21 View Post
Indian government spend crores in raising awareness on environment issues, organising various camps, meetings and seminars. Trips across the world are made to learn and understand how to best protect our environment and then they allow a decision, which impacts the life of a common citizen and is in complete contrast to what is said and planned.
In a country like India, heavily dependent on imported fuel (and falling domestic gas production), it is inevitable that prices of CNG would rise sometime. Thats what IGL has said as well:
Quote:
There has been a reduction in allocation of APM gas to us, which is forcing us to source more quantity of market priced imported R-LNG
APM gas costs $4.2/mmbtu.
RLNG costs $13.75/mmbtu - over thrice as much.

That said, you're right -if the government is serious about its commitments, it should manage the end-user price of CNG to be at an optimum discount to diesel, low enough that public transport continues to be on CNG, but high enough that individual users do not convert in large volumes (increasing the subsidy burden).
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Old 27th December 2013, 10:31   #7
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Default Re: CNG Price hike by Rs 4.50 in Delhi

So, what is going to be the impact in Mumbai Prices?

And more importantly, from when is the implementation date?
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Old 27th December 2013, 10:35   #8
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Default Re: CNG Price hike by Rs 4.50 in Delhi

Quote:
Originally Posted by amitpunjani View Post
IGL announced 10% hike in CNG price. In Delhi the price of CNG is now Rs.50.10/kg, where as Diesel is Rs. 53.78/L. CNG @ one point of time used to be the cheapest fuel, after this price hike will loose its complete advantage.
To bring them at par - lets do a Rupee per KG comparison.
CNG is Rs 50 / kg
Diesel is Rs 64 / kg (density of diesel is 0.83 to 0.85)

I still see a considerable gap to make this feasible.
Remember our country doesn't have much of oil&gas reserves. Which means that we will always be at mercy of the prevailing market rates of crude oil and liquefied natural gas.

However, there is one really funny thing about the LNG. Most LNG worldwide is NOT traded on spot market. There are long term contract rates fixed by the supplier and the importer/distributor. The importer/distributor has his re-gasification plant (which are going to increase tremendously in the coming 4-5 years in India). So if this hike is because of low regas capacity in the country - it will take time to come up to speed.

Also note that India is also exploring unconventional gas means - like Coal bed methane - where blocks have been assigned to multitude of operators. (Essar is going to be the first to start operations, next in line is Reliance, and then many more). This should reduce our dependence on the imported fuels. (Perhaps bring down the prices)

Last edited by alpha1 : 27th December 2013 at 10:41.
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Old 27th December 2013, 11:47   #9
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Default Re: CNG Price hike by Rs 4.50 in Delhi

CNG price reduced by Rs. 10 in Gujarat. This is same day news. Certainly the policymakers & price deciders have to give a thought. Here are the links:

http://timesofindia.indiatimes.com/c...w/27990519.cms

Some, interesting analysis:
http://www.firstpost.com/politics/wh...t-1309327.html

Last edited by anujmishra : 27th December 2013 at 11:48.
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Old 27th December 2013, 11:52   #10
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Quote:
Originally Posted by alpha1 View Post
To bring them at par - lets do a Rupee per KG comparison.
CNG is Rs 50 / kg
Diesel is Rs 64 / kg (density of diesel is 0.83 to 0.85)

I still see a considerable gap to make this feasible.
Remember our country doesn't have much of oil&gas reserves. Which means that we will always be at mercy of the prevailing market rates of crude oil and liquefied natural gas.

However, there is one really funny thing about the LNG. Most LNG worldwide is NOT traded on spot market. There are long term contract rates fixed by the supplier and the importer/distributor. The importer/distributor has his re-gasification plant (which are going to increase tremendously in the coming 4-5 years in India). So if this hike is because of low regas capacity in the country - it will take time to come up to speed.

Also note that India is also exploring unconventional gas means - like Coal bed methane - where blocks have been assigned to multitude of operators. (Essar is going to be the first to start operations, next in line is Reliance, and then many more). This should reduce our dependence on the imported fuels. (Perhaps bring down the prices)
The Right way to compare fuels is not by mass but by unit energy cost which should ultimately boil down into a practical per km running cost.

You're right about most gas not being consumed at spot prices but bear in mind that it won't be much cheaper either. That's why the new has pricing formula by the rangarajan committee has arrived at import parity prices above $8/mmbtu which is still twice the current apm prices.
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Old 27th December 2013, 15:42   #11
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Default Re: CNG Price hike by Rs 4.50 in Delhi

Quote:
Originally Posted by bluevolt View Post
Rs. 50/kg for CNG?

Though there is still the difference of Rs. 20 between prices of CNG & petrol but slowly with each hike this will further shrink and converting a petrol car to CNG or buying a factory fitted CNG car will not be logical then.
I've recently added a CNG car to my existing petrol-only garage.

While I agree the differential will come down, another way to look at the petrol vs CNG vs diesel debate is within the following framework:

1. Assume subsidies over the 6-year window from 2014-2020 will reduce across the board viz. petrol, diesel, and CNG with the maximum reduction taking place in diesel and CNG since petrol is already priced close to market.

2. Neither mileage nor energy-potential differential between petrol on one side and diesel / CNG on the other side will change by much since technology improvements will take place in each of the 3 options. This ignores potential for sudden discoveries or inventions - but you can't predict that stuff anyway.

3. CNG is a waste byproduct of petrol hence it's already subsidized by petrol in a very natural manner within the marketplace. This cannot change i.e. it cannot be more expensive than petrol even if 100% deregulated.

4. Diesel will attain parity or even be slightly more expensive than petrol when fully decontrolled. Between 2014-2020 however, the parity will only occur towards the end - say by 2018 or 2020. This lag in parity combined with slightly higher fuel efficiency of diesel engines will be a saving but this saving will largely be notional due to the petrol versus diesel car purchase price differential.

These points lead to the following conclusion viz.

Purchasing a car for moderate to heavy mileage (1500+ KM PM) today for ownership between 2014-2020 is a wash between petrol and diesel but with a slightly positive TCO for CNG.

Or simply put, the comparison boils down to the following "price per KM" guesstimate across 2014-2020:

1. Rs. 1.33 and increasing at 15% annually for CNG.
2. Rs. 3.33 and increasing at 10% annually for Diesel.
3. Rs. 6.25 and increasing at 5% annually for Petrol.

Anyway, that's my way of justifying a purely emotional choice :-)


Cheers,
Varun
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Old 27th December 2013, 18:44   #12
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Default Re: CNG Price hike by Rs 4.50 in Delhi

Quote:
Originally Posted by varshar View Post
I've recently added a CNG car to my existing petrol-only garage.

While I agree the differential will come down, another way to look at the petrol vs CNG vs diesel debate is within the following framework:

Or simply put, the comparison boils down to the following "price per KM" guesstimate across 2014-2020:

1. Rs. 1.33 and increasing at 15% annually for CNG.
2. Rs. 3.33 and increasing at 10% annually for Diesel.
3. Rs. 6.25 and increasing at 5% annually for Petrol.
Your assumptions and logic while sounding nice and not correct by and large.

a. natural gas is NOT a byproduct of petrol. A simple google will prove that.
b. Your growth rate assumptions are wrong. If the government really goes through with the APM price hike via the rangarajan committee, you will see a much larger hike right away.
c. Your assumptions on #2 and #4 are too far fetched to be rooted in reality. Diesel is a political hot potato. To assume it will reach parity between 2018-2020 (the next gen election time) is hopeful at best.

Last edited by Technocrat : 27th December 2013 at 21:49. Reason: Please quote selectively sepcially if the quoted post is on same page. Thanks
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Old 27th December 2013, 19:22   #13
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Petrol prices were already being steadily hiked. Then diesel unregulation took place. Upon suddenly realizing that CNG private cars are high in demand, the regulatory body for natural gas introduces new protocols for natural gas transmission, and up goes CNG prices.

Let's face it, fuel prices in our country are going to be hiked repeatedly, be it cng, petrol or diesel. Its best to go with the fuel that is currently the best choice(I'd vote for diesel), and understand that things may not always stay the same.
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Old 27th December 2013, 21:15   #14
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Default Re: CNG Price hike by Rs 4.50 in Delhi

Quote:
Originally Posted by phamilyman View Post
Your assumptions and logic while sounding nice and not correct by and large.

a. natural gas is NOT a byproduct of petrol. A simple google will prove that.
b. Your growth rate assumptions are wrong. If the government really goes through with the APM price hike via the rangarajan committee, you will see a much larger hike right away.
c. Your assumptions on #2 and #4 are too far fetched to be rooted in reality. Diesel is a political hot potato. To assume it will reach parity between 2018-2020 (the next gen election time) is hopeful at best.
Thank you for correcting me on natural gas. I didn't realize that it's production as petrol byproduct has come down to just 1/3'rd of global supplies.

However, I do stand by my assumptions and also that what worked for the past 5 years (go for diesel) may not work for the next 5.

Petrol - diesel difference is already down from Rs. 32 to 17.

With creeping monthly increases of 50 paisa, a single digit difference looks quite possible within just 1.5-2 years.

Opinions might vary, but IMO this 50 paisa monthly hike is a no longer a political hot potato. If anything, the APM price hike is a political hot potato since it directly impacts agriculture and power sectors.


-v
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Old 30th December 2013, 15:09   #15
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Default Re: CNG Price hike by Rs 4.50 in Delhi

Quote:
Originally Posted by phamilyman View Post
The Right way to compare fuels is not by mass but by unit energy cost which should ultimately boil down into a practical per km running cost.
Agreed.

The cal vals of major fuels (in MJ/kg):
Natural Gas (technically methane) = 50
LPG (technically mix of propane and butane) = 46
Petrol = 44.4
Diesel = 43.4
Coal (anthracite - highest grade) = 32.5

Although I do not know if this has direct bearing on the fuel consumption (km/kg of fuel or km/MJ of fuel)



In fact I find it laughable that petrol and diesel are being sold in litres. It is a stupid concept because of variations in volume due to temperature.
The custody transfer (Oil refinery to oil distributor and oil distributor to petrol pump happens in temperature corrected Kilolitres - which is a more elaborate way of saying kilograms).
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