Potential Relief for CNG and CBG in India: Impact on Consumers and Gas Distribution
Key Ideas
- Sanjay Kumar from GAIL discusses potential excise duty rationalization for CNG and CBG, which could lead to significant price reductions of Rs 4 to Rs 4.50 per kg, benefiting consumers.
- Lower CNG prices could boost demand in both commercial and personal transportation sectors, making CNG vehicles more attractive compared to diesel or petrol.
- Reduction in excise duty would positively impact gas distribution companies, potentially increasing daily revenue by up to 0.5 crore, especially for joint ventures and subsidiaries of GAIL.
- Government's focus on cleaner energy sources like gas may lead to a significant increase in gas demand in India, potentially doubling if gas is included under GST in the next seven years.
The Indian government is considering providing relief to city gas distribution companies by rationalizing the tax structure for Compressed Natural Gas (CNG) and Compressed Bio-Gas (CBG). Sanjay Kumar from GAIL expressed optimism about the possibility of reducing the excise duty on CNG, which currently stands at around 14%. A potential 50% reduction to 7% could lead to a significant price drop of Rs 4 to Rs 4.50 per kg, providing relief to consumers. This price reduction could drive higher demand for CNG vehicles in both commercial and personal transportation sectors. GAIL, mainly focused on gas transportation, foresees a positive impact on its joint ventures and subsidiaries, with potential daily revenue increases of up to 0.5 crore.
Sanjay Kumar highlighted the importance of gas availability for meeting the increasing demand, mentioning the challenge of sourcing gas from various suppliers at different prices. He also emphasized the significance of including gas under GST to further support the gas industry. The industry's shift towards cleaner energy sources aligns with the government's push for cleaner fuels, potentially leading to a doubling of gas demand in the next seven years if gas is incorporated into GST. Overall, the potential relief in excise duty for CNG and CBG in India could have a positive impact on consumers, gas distribution companies, and the gas transportation sector, driving growth in the gas industry and supporting cleaner energy initiatives.