After a week's deferment, Mahanagar Gas Limited increased prices of compressed natural gas and piped natural gas by around 30 per cent in the Mumbai metropolitan region on Wednesday.
Price per cubic metre of PNG supplied in Mumbai homes would be Rs 17.74, up from Rs 13.60 while users will have to pay Rs 31.47 per kg of CNG, up from Rs 24.65, a release issued by MGL said.
The company has been forced to hike the prices in view of the increase in MGL's gas purchase price and higher cost involved in sourcing additional market priced gas, MGL said.
The Union government on May 31 had doubled the price of natural gas from Rs 3.2 per cubic metre to Rs 7.5. The imminent hike was deferred by MGL due to "verbal" instructions from the government to make the announcement on the same day when petrol and diesel prices are hiked.
Indraprastha Gas Ltd also hiked CNG prices in New Delhi by over 25 per cent.
CNG rates in Delhi will go up by Rs 5.60 per kg - from Rs 21.90 to Rs 27.50 per kg, IGL said in a statement.
"The new consumer price of Rs 27.50 per kg in Delhi and Rs 30.60 per kg in Noida, Greater Noida and Ghaziabad would be effective from midnight tonight," it said.
IGL, however, did not increase the price of gas that it pipes to households for cooking purpose. Piped natural gas will continue to be priced at Rs 15.92 per cubic meter.
Sources said a rate hike would have resulted in piped gas losing its cost competitiveness over rival domestic LPG. IGL may decide to raise piped gas price by close to a rupee if the government were to raise LPG prices.
"We are constrained to increase the retail selling price of CNG in Delhi, Noida, Greater Noida and Ghaziabad due to the increase in the input price of gas procured by IGL along with its corresponding taxes and duties," IGL director (commercial) Manmohan Singh said.
MGL said in spite of gas cost doubling, its selling prices have increased by only 28 per cent for CNG and 30 per cent for PNG.
Even after the hike, CNG and PNG continue to remain a cost-effective alternative to the conventional petrol/diesel, it said.
With the purchase price being linked to exchange rates under new policies of the government, MGL said it will be periodically revising prices of its offerings.
Even after today's price hike, CNG would still offer 59 per cent savings in terms of running cost compared to petrol driven vehicles at the current level of prices in Delhi. When compared to diesel driven vehicles, the economics are in favour of CNG at revised price would be 28 per cent.
Singh said the increase in CNG prices will marginally impact the per kilometer running cost for the vehicles.
"For autos, the increase would be just 16 paisa per km, for car/taxi it would be 27 paisa per km and in case of buses, the increase would be Rs 1.60 per km, which translates to less than 3 paisa per passenger-km," he said.
Prior to the price hike, CNG gave 40-41 per cent better fuel efficiency than diesel and 67 per cent saving over petrol in terms of cost.
Even after the hike, CNG in Delhi will be the cheapest fuel in the country.
IGL in Delhi and MGL in Mumbai are the only city gas companies in the country that buy government-controlled gas, called APM gas, the price of which were raised last month.
APM gas makes up for 90 per cent of the fuel that IGL buys. It buys about 2 million standard cubic meters per day of APM gas from state gas utility GAIL India and the rest 0.2 mmscmd from Reliance Industries.