Soaring fuel prices to lend wheels to CNG adoption in India: CRISIL
The soaring prices of petrol will lead to an increase in adoption of compressed natural gas (CNG) driven vehicles in India as the price differential between the cost of running a petrol-driven car versus CNG has widened to 44%, according to a research report.
The price of petrol has breached Rs 85 a liter in New Delhi as excise duty rose by Rs 13 to Rs 32.98 per litre in 2020. In calendar 2021, CRISIL Research expects Brent crude to rise by about 23% year-on-year to an average $50-55 per barrel from $42.3 per barrel in 2020, as economic activity recovers globally.
“Tax now accounts for over 60% of the retail selling price of petrol, compared with 47% in 2019. Given that the government has to find the money to ramp up public spending – and is also promoting usage of cleaner fuels – it is unlikely that the tax on petrol will come down to previous levels anytime soon,” said Hetal Gandhi, Director, CRISIL Research.
Domestic gas prices are expected to rise similarly by over 20% to $2.5-3.5 per million British thermal unit (mBbtu) in 2021 from $2.45 in 2020. However, the absolute price differential between petrol and CNG retail prices will remain wide because of higher taxes on the former.
