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Why is the price of CNG different?

Why CNG prices vary in India: Amidst the skyrocketing prices of petrol and diesel, if you own a CNG car, you must consider yourself a little lucky. It is natural to think that CNG means cheap, economical and better ride for the environment. But have you ever matched your CNG receipt with the receipt of a friend from a neighboring city? If you do this, you will probably be shocked.

This is a truth that most of us do not pay attention to. Like petrol and diesel, CNG prices are also not uniform across India. This difference is not just of a few rupees, but ranges from Rs 10 to Rs 15 per kg between many cities. This directly affects your pocket and your monthly budget. For those who are thinking of buying a new CNG car or installing the kit in their old car, it is very important to know why this 'saving' fuel does not give the same 'savings' everywhere.

One country, one gas… still why many 'prices'?

It is natural to have this question in mind that when gas is the same, then why is there such a huge difference in its price in different corners of the country. Its roots are hidden in our tax structure and distribution system.

The biggest and first reason for this is the tax structure. We all have heard the name 'GST', which was brought in the form of 'One Nation, One Tax'. But natural gas, from which CNG is made, is still kept out of the sacred ambit of GST. Like petrol and diesel have been kept.

This simply means that every state government has free rein to impose tax on it as per its wish. This is called Value Added Tax (VAT). Now, if a state wants to provide relief to its citizens, it charges less VAT, which makes CNG cheaper (like Delhi). At the same time, if any other state imposes more VAT on it to fill its treasury, then CNG immediately becomes expensive there. Unless CNG comes under the purview of GST, this huge disparity in prices will continue.

The 'supplier' of every city is different, so the cost is also different.

The second major reason for the difference in prices is the different gas distribution company (City Gas Distribution – CGD) of each city. You must have heard their names, like Indraprastha Gas Limited (IGL) works in Delhi and NCR, while Mahanagar Gas Limited (MGL) supplies gas in Mumbai and its surrounding areas. Similarly, companies like Adani Total Gas or Gujarat Gas are active in Gujarat.

All these companies buy gas, store it and then transport it to the pumps through their pipeline network or through special tankers. All these companies have different operating costs and profit margins.

Apart from this, the cost of transportation also plays an important role. Gas has to be transported from big gas terminals to the interior parts of the country. Obviously, the farther the city is from these terminals, the higher will be the transportation cost of delivering gas there, which is ultimately recovered from the customer's pocket.

From Delhi to Lucknow.. see how big is the 'gap' in prices.