Government orders sale of gas at uniform price to city CNG projects

After a rap from the Gujarat High Court, the government has decided to allot natural gas at a uniform price to retailers of the fuel in different cities.

Presently, cheaper domestically produced gas is mostly allocated to firms in Delhi and Mumbai for sale to automobiles and households, while costlier, imported gas is sold to such suppliers in other cities. Compressed natural gas (CNG) is used by automobiles and piped natural gas (PNG) is supplied as a cooking fuel.

The Gujarat High Court had on July 25 last year ordered that gas be made available for city gas distribution (CGD) projects in Ahmedabad at the same rate as in Delhi and Mumbai.

The Supreme Court upheld the order on September 30 but it was not implemented. The Gujarat High Court last week ordered the Oil Secretary to appear before it if the order was not complied with by November 18. The Oil Ministry on November 14 issued guidelines for "allocation/supply of domestic natural gas to CGD entities" for sale to automobiles and households.

It allocated 6.4 million standard cubic meters per day of domestically produced gas, which is currently sold at USD 4.2 per million British thermal units, to meet almost 80 per cent of the requirement of CNG and PNG in all cities.

Allocation to cities is to be made in proportion to demand, the order said, adding that presently, 8.02 mmscmd of gas is consumed by city gas projects.

State-owned gas transportation and marketing monopoly GAIL India Ltd has been asked to ensure "uniformity in supply of domestic gas across all CGDs for CNG and PNG segments without discrimination among CGD entities, subject to operational imperatives," the order said. This would mean that some of the cheaper domestic gas meant for CGD entities in Delhi and Mumbai will be diverted to other cities such as Ahmedabad.

Any supply shortfall will be met from imported liquefied natural gas (LNG), which costs almost three times more than domestically produced gas. "The consumption figures of CNG and PNG for the purpose of proportionate distribution of domestic gas to CGD entities shall be periodically (annually) reviewed by GAIL.

"In case of increase in demand (including that arising from new CGD entities) for CNG and PNG, GAIL would ensure to distribute the available quantity of domestic gas for CNG and PNG in proportion to the demand, without discrimination among CGDs," the order said.

Of the 6.4 mmscmd allocated for CGD projects, 5.93 mmscmd would come from fields operated by state-owned Oil and Natural Gas Corp and the remainder from the BG-operated Panna/Mukta and Tapti fields off the west coast.