Prices of Compressed Natural Gas (CNG) were hiked again on Tuesday by ₹2 per kilogram (kg) in Delhi and parts of North India, marking the fourth hike in 11 days, as input gas costs continue to rise against the backdrop of the West Asia conflict.

With the latest increase, CNG in the National Capital Territory (NCT) of Delhi now costs ₹83.09 per kg.

Since the first hike on May 15, CNG prices in Delhi and across several cities of Uttar Pradesh, Haryana and Rajasthan, have cumulatively increased by ₹6 per kg.

The first increase of ₹2 per kg was implemented on May 15, followed by hikes of ₹1 per kg each on May 17 and May 23.

City gas distributors in other parts of the country have followed largely similar trends—hiking prices, albeit in a scattered, piecemeal manner and not necessarily of the same magnitude.

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Revised prices

With the latest price revision, CNG is now being sold at Indraprastha Gas Limited stations in Uttar Pradesh’s Noida and Ghaziabad at ₹91.70 per kg, Meerut at ₹91.58 per kg and Kanpur at ₹94.42 per kg. In Rajasthan’s Pali and Ajmer, CNG now costs ₹92.44 per kg. In Haryana’s Rewari, it is now available at ₹87.70 per kg and ₹88.12 per kg in Gurugram.

Scope for more hikes

Speaking to The Hindu, Prashant Vashisht, senior vice-president and co-group head of corporate ratings at ICRA, said that contribution margins—the difference between realisation from sales and the cost of procurement— have come down for city gas distributors (CGD) due to the ongoing conflict.

“The cumulative hike [of ₹6 per kg] is still not enough to cushion the CGDs considering the impact on their contribution margins,” he stated.

Mr. Vashist further noted that imported liquified natural gas (LNG), which has become increasingly expensive amid the conflict, has seen a higher share in the CGDs’ overall mix, further compressing margins.

An additional factor, according to him, is that the procurement of imported gas is denominated in U.S. dollars.

“All the procurements are made in dollars per metric million British thermal units (MMBtu). Therefore, even if LNG prices do not move, but the dollar appreciates, or the rupee depreciates, it impacts CGDs’ margins,” he explained.