CNG Prices Set to Rise Following Government’s 4% Increase in APM Gas Rates
The price of compressed natural gas (CNG) is expected to go up starting April 1 after the government raised the rate of natural gas supplied from old fields under the Administered Price Mechanism (APM). The APM gas price has been increased by 4%, moving from $6.50 to $6.75 per million British thermal units (MMBtu).
CNG Price Hike
This is the first increase in the APM gas price in two years and is part of a phased plan to gradually raise prices each year until 2027, when full deregulation of natural gas pricing is scheduled. The latest hike is expected to directly impact city gas distributors, who may pass on the additional cost to consumers, thereby increasing the retail price of CNG.
The hike is likely to affect millions of CNG users across urban India, particularly those who rely on CNG-powered vehicles for daily transport. The increase in input costs may prompt city gas companies to raise pump prices to offset the impact of higher procurement rates.
Impact on Energy and Fertilizer Costs
The revised pricing is not limited to transportation. APM gas is also a critical input for electricity generation and fertilizer production. With higher input costs, power producers could see an increase in generation expenses, which might trickle down into electricity bills. Fertilizer manufacturers, on the other hand, may face a squeeze in margins or pass on costs to farmers, potentially affecting agricultural input prices.
The gas price adjustment reflects the government’s aim to bring domestic prices closer to global benchmarks while ensuring adequate returns for producers. However, this also brings challenges in managing inflationary pressures and keeping energy affordable, particularly for economically sensitive sectors.
While the increase may appear moderate, its ripple effect across sectors like transport, energy, and agriculture is significant. Consumers and businesses alike will have to brace for the impact, especially as global energy prices remain volatile and domestic policy continues its shift toward market-linked pricing.
