Why is it expected that CGD prices for households and vehicles could rise?

The prices of city gas is likely to go up sharply after the Oil Ministry stopped fresh allocation of natural gas from domestic fields to the city gas (CGD) sector. This also raises some serious questions about the viability of the Rs.2 trillion investments that have been planned in the sector so far. Above all, this is likely to result in a spike in the price of CNG and piped cooking gas prices as supply gets constrained amidst rising demand.

In Delhi, the auto unions are already up in arms against this proposal as it is likely to result in a sharp increase in their cost of operations. CGD operators have been requesting that at least the ministry should try and maintain the gas supply to the sector a that the current levels to avoid any negative disruption. However, the ministry has not made any fresh allocation for more than 1 year. At the same time, prices have been hiked by 110%.