Prices for compressed natural gas (CNG) has been reduced by Rs 8 per kilogram. 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.

1. CNG prices reached an all-time high in November 2023
2. Sales of CNG vehicles has seen a YoY growth of 40.71 percent

This latest price cut is the second time that the CNG prices have dropped in 2023, 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 2022.

Vinod Aggarwal, SIAM president said: “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.”

CNG price comparison with petrol, diesel

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

Following the slashing of CNG price by Rs 8 per 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 percent

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 multiple price hikes in 2022. Retail sales of CNG vehicles, across four sub-segments, crossed the 6,50,000-unit mark for the first time in a fiscal in financial year 2023. Cumulative sales of 6,60,153 units translate into strong double-digit YoY growth of 46 percent.  

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 financial year 2023. 

With such a big price cut for CNG, would you consider getting a CNG-powered vehicle? Let us know in the comments.