Taxi, auto rates to rise in metros as CNG price hiked

As a prelude to costlier petrol and diesel, the oil ministry has allowed Indraprastha Gas Ltd and MGL, which supply natural gas as automotive fuel in Delhi and Mumbai respectively, to raise the price of compressed natural gas (CNG) from Wednesday midnight. In Delhi, CNG will go up by Rs5.60 to Rs27.50 per kg, while in Mumbai the price will go up from Rs 24.65 to Rs 31.47 per kg.

Mumbai's taxi and auto unions were as usual the first to react. The taxi union said they would keep off the road once their fuel tanks were empty unless they were granted an immediate fare hike, while the auto drivers threatened to go on strike from 22 June.

The price hike is widely seen as a precursor to an increase in the administered rates for petrol and diesel, though market-related pricing still seems a far cry. IGL did not increase the price of gas that it pipes to households for cooking.

Piped natural gas will continue to be priced at Rs15.92 per unit, indicating that the panel on fuels may not raise price of cooking gas cylinders. MGL, however, raised the piped gas price to Rs17.74 per unit from Rs13.60.

After the cabinet raised the price of gas under government control last month, CNG prices were slated to be revised from 8 June. A ministerial panel on fuels was expected to have decided by 7 June on freeing up petrol and diesel pricing or raise their prices by Rs3-4 a litre, which would have helped CNG retain its cost competitiveness. But since the panel could not decide the issue on that date due to the absence of key ministers, hence the oil ministry asked IGL and MGL to hold the CNG price revision.

After Monday's decision, CNG will lose some of its advantage over petrol and diesel but once liquid fuel prices too are raised - almost certain next week - the cost benefit will once again bounce back in CNG's favour.

For autorickshaw operators running costs will increase by 16 paisa per km. This means Rs1.60 extra for a 10-km trip. For taxis or the few private cars that run on CNG, the increase will be 26 paisa per km, or Rs2.60 extra for a 10-km trip. For a similar trip in a bus, the increase will be 3 paisa per km, or 30 paise extra - because the per-km cost will increase by Rs1.60 for the entire busload of people.

Even after the increase, CNG in Delhi will still be cheaper than other cities that are outside the ambit of the cabinet's decision to raise the price of gas, since they sell fuel sourced at market prices.