CNG price slashed by Rs 8 per kg, brings cheer to motorists and industry

In what will come as welcome news for scores of motorists and also fleet operators using CNG-powered vehicles, the price of compressed natural has been slashed by Rs 8 per kilogram.

This is the biggest-ever cut in recent times and takes the price of CNG in Mumbai to Rs 79 per kg from Rs 87 per kg. The steep price cut is the result of the Union Cabinet’s decision on April 6 to revise the pricing methodology of naturas gas produced in the country.

This latest price cut is the second reduction in CY2023, with the first being a Rs 2.50 cut which saw CNG being made available at Rs 87 per kg in Mumbai. CNG price had hit its all-time high of Rs 89.50 per kg in November 2022, following eight price hikes in the first 10 months of CY2022.

Lauding the move, Vinod Aggarwal, president, SIAM and MD and CEO of VE Commercial Vehicles, said: “Realignment of the gas pricing mechanism by insulating the Indian consumers from the spikes in global prices will soften prices in India and will provide much-needed relief to the transportation sector. This measure will also help in re-igniting interest in CNG vehicles in India and would go a long way in promoting a clean alternative fuel in various parts of the country. Incentivising greater production of natural gas will result in reduction in import dependence of conventional fuels, thereby enabling expansion of CNG infrastructure across the country and facilitating wider availability of CNG for vehicles.”

Wallet- and eco-friendly fuel
From a consumer’s point of view, other than the environment-friendliness of CNG, a CNG-powered vehicle provides considerable savings compared to its petrol or diesel-engined siblings. What’s also driving the consumer shift to CNG models is the high price of petrol (Rs 106.29 a litre in Mumbai) and diesel (Rs 94.25 a litre in Mumbai on April 7, 2023). CNG in Mumbai costs Rs 87 per kg.

Following the slashing of CNG price today by Rs 8 a kg to Rs 79 kg, CNG price now stands Rs 27.29 cheaper than petrol and Rs 15.25 cheaper than diesel. This is set to give a fillip to sales of CNG vehicles across segments.

CNG vehicle sales surge by 46% to over 650,000 units

Given the favourable pricing of CNG to petrol and diesel, it is not surprising that sales have been on the upswing for the past few years, despite the large number of price hikes in CY2022. 

Retail sales of CNG vehicles, across four sub-segments, crossed the 650,000-units mark for the first time in a fiscal in FY2023. Cumulative sales of 660,153 units (see data table above) translate into strong double-digit YoY growth of 46%.  

Sales of CNG-powered passenger vehicles (PVs) have surged by 40.71% year on year to 318,752 units (FY2022: 226,547 units), accounting for 8.80% of overall retail sales of 36,20,039 PVs in India. 

While three-wheelers clocked 93% growth with retails of 241,230 units (FY2022: 124,863), demand for CNG goods vehicles was down by 4% YoY to 94,433 units. The goods vehicle segment is seeing greater demand in the form of electric mobility, where the lower cost of ownership, compared to CNG, is driving demand from last-mile mobility and logistics operators. 

With the Central and state governments pushing demand for CNG buses, while also expanding the CNG filling network across the country, CNG bus sales rose sharply by 226% to 5,738 units (CY2022: 1,761 units)     

Clearly, the smart increase in consumer demand for CNG vehicles continues to be driven by the lower cost of ownership mantra that the greener fuel offers in the face of high petrol and diesel prices. The latest price cut will only serve to spur demand in FY2023. 

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