Saturday, July 13, 2024

PNG may replace cylinders in well-covered areas over time

New Delhi: The Union government is considering phasing out cooking gas cylinders in the long run in regions adequately covered by piped natural gas (PNG).

The government spends around 6,100 crore in welfare subsidies for liquefied petroleum gas (LPG) customers under the Pradhan Mantri Ujjwala Yojana (PMUY). It has also made a budgetary outgo of about 22,000 crore for the three state-run oil marketing companies that have had to bear losses as they could not increase gas prices in line with the international prices in the past year.

“Government has asked the PNG industry players to see if a sunset timeline can be fixed on the use of LPG for areas which have adequate gas supplies through the PNG network,” said a person aware of the development.

The move comes against the backdrop of declining demand for PNG in the past year. PNG prices are entirely market-driven. Although LPG prices have also been rising, they are subsidized because they benefit economically depressed classes.

“PNG players had reached out to the government in the wake of the weakening demand for PNG over the past year, and the industry has been asked to look into the prospects of a sunset timeline for LPG in some regions,” the person added.

A second person said the government has suggested oil and gas companies phase out the usage of LPG and ensure that gas is consumed only through the piped network.

“OMCs and other oil and gas companies have been asked to transition household cooking gas consumption in their townships to PNG from LPG. If found viable, this could be implemented in other regions too in the longer term.”

Queries sent to the Union ministry of petroleum and natural gas remained unanswered at press time.

PNG prices have been rising consistently. Supplier Indraprastha Gas Ltd (IGL) on Friday announced a hike in Delhi-NCR by 5-5.85 per standard cubic metre (scm). PNG will now cost 41.61 per SCM in Delhi and 41.71 per scm in Noida, Greater Noida and Ghaziabad.

In the national capital, a 14 kg cooking gas cylinder is priced at 1,103. Under the Pradhan Mantri Ujjwala Yojana scheme, the Centre gives a subsidy of 200 per cylinder for up to 12 refills a year. The subsidy was announced in May last year amid rising inflation. Recently, the scheme was extended for FY24 with a fiscal outgo of 6,100 crore.

Despite the frequent increase, the price of PNG is still lower than that of LPG, although the difference has narrowed. Petroleum minister Hardeep Singh Puri told the Lok Sabha recently: “PNG is generally cheaper per unit of energy consumed than LPG. Depending on local prices, the conversion factor of the cooking stove, etc., PNG provides a positive competitive advantage over LPG.”

Expansion of the piped gas network has been a major focus of the government, with its target of achieving a gas-based economy. According to the government, 297 geographical areas covering about 98% of the population have been authorized for the development of the city gas distribution network.

As of 31 December, PNG connections in the country stood at more than 10 million. The government aims to increase this to 123 million by 2030.

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