A whopping increase in the natural gas prices is now going to rumble its way towards CNG (Compressed Natural Gas) and PNG (Piped Natural Gas) users, making the date April 1, 2025, a real turning point. The increase will directly affect the owners of vehicles and households with augmented costs of fuel and cooking gas.
What Are The Reasons That CNG And PNG Are Getting More Expensive?
The government has amended the APM (Administered Pricing Mechanism) gas prices. It has announced that the gas price is $6.75 per MMBTU (Million British Thermal Units) from the previous $6.50. Since APM gas is a major source for production of CNG and PNG, changes in its prices would suggest higher retail prices for the end users.
How Much Will Prices Increase?
- Former APM Gas Price: $6.50/unit
- New APM Gas Price (Effective April 2025): $6.75/unit
The $0.25 increase looks small but can have a ripple effect to make CNG dearer for the drivers and PNG increasingly expensive for households.
What Is APM Gas And Why Does One Need It?
APM gas is gas produced from the old fields in India. This is mainly used as:
- CNG for vehicles
- PNG for cooking
- Power generation
- Fertilizer production
Since APM sources reportedly account for nearly 70% of India’s domestic gas supply, logically, one can say that any change in APM prices directly affects those millions of consumers.
Why The Increase In Gas Prices By The Government?
In April 2023, the government announced a new pricing mechanism for gas, which linked the price of domestic gas to 10% of the international crude oil price, as follows:
- Minimum pricing is $4 per unit;
- Maximum pricing is $6.50 per unit.
Till 2027, there will be an increase of $0.25 every year. Now under the same policy, the maximum price has been increased to $6.75.
How Will This Affect Consumers?
CNG Vehicle Owners:
An increase in fuel costs increases the pocket of daily commuters and commercial drivers.
The transportation fares may increase, affecting the cab and auto-rickshaw users.
Household PNG Users:
The bill for cooking gas will increase, thereby disturbing the monthly budget.
The families that use PNG for daily cooking will feel the pain.
Long-Term Impact:
Gas prices will keep rising every year until 2027, adding inflation.
The gas distribution companies may pass the burden onto consumers via frequent price changes.
