Energy shock: CNG price hiked by ₹3.89 per kg in Delhi as spot LNG rates soar amid US-Iran war

In a move that will come as a shock to the common man, Indraprastha Gas Ltd (IGL) has increased CNG price in Delhi and adjoining cities. IGL has announced a price hike of ₹3.89 per kg. The revised rates will be effective from 6 am today.

The move comes on the back of high LNG prices in the spot market. This is the fifth price hike by IGL in the wake of the West Asia crisis. The first four hikes took place in May this year in quick succession over two weeks.

"A significant portion of input gas for CNG is being met through imported LNG, whose rates in the spot or current market have seen a surge since the beginning of the West Asia conflict," IGL said in a statement short while ago.

"With international LNG prices remaining elevated and the cost impact becoming increasingly significant, a calibrated revision of ₹3.89 per kg has now become necessary to partially offset the increase in input gas cost," IGL said.

Since CNG is widely used by transport vehicles, there will be a major ripple impact on the prices of food, vegetables due to higher overall transport cost.

In the wake of the West Asia crisis, the government has increased petrol prices to lower the losses by the oil marketing companies in the wake of the rising crude oil prices. However, the government took a calibrated approach to fuel price hike in order to ensure minimal impact on the common man.

Why is the government increasing CNG prices?

This time, the increase has come against a backdrop of increased pressures in the energy market globally. Ongoing conflicts in West Asia have affected the supply and cargo of LNG, resulting in an increase in global natural gas prices.

In addition to these factors, increased demand for LNG due to efforts made by European nations to build their reserves of natural gas has resulted in increased international LNG prices. This would further increase the cost of inputs for local CNG producers.

No change in PNG prices for now

While consumers of CNG will be paying higher rates, there is no change in the price of PNG for now. This implies that the current increase will have no immediate impact on the cost of cooking gas at homes.