Demand-side aspects like user habits and switching costs clubbed with supply-side aspects like economies of scale (achieved through network expansion and attainment of critical mass) render gas much more advantageous as a fuel. There is a considerable difference between the price/cost structure of gas and that of other competing fuels. In the household segment, PNG costs at least a rupee less than liquefied petroleum gas (both subsidised and non-subsidised variants) for 1,000 kCal. In the transport segment, the cost of the delivered price of CNG works out to be Rs 5.19 for 1,000 kCal in contrast to that of diesel at Rs 7.24 (Delhi prices).

In the 15th annual conference on City Gas Distribution in India organised by India Infrastructure Publishing, K. Ravichandran, Group Head, Corporate Sector Ratings, ICRA made a presentation on the cost economics and business viability of CGD projects which can be downloaded here.