IGL witnesses a 20% reduction in November gas allocation

18 Nov 2024 , 10:59 AM

Indraprastha Gas Ltd (IGL) has announced a further 20% reduction in its domestic gas allotment, beginning November 16, 2024. This drop reduces the company’s overall petrol allotment to 46%, down from 70% last month. The revised allotment is projected to have a substantial impact on IGL’s operations, including its capacity to satisfy Compressed Natural Gas (CNG) sales levels.

In a filing with the bourses, the business informed that “the revised domestic gas allocation to the Company is approximately 20% less than the previous allocation, which will have an adverse impact on profitability.” GAIL (India) Ltd. provides the gas for a set price of $6.5 per million British thermal units (mmbtu).

This announcement comes after a similar cut in petrol allocation earlier in October 2024, which sparked concerns about the company’s ability to meet demand. “The Company is exploring all options to address the issue,” the statement continued.

While the business has not disclosed which alternatives are being investigated, the reduced allocation is expected to have an impact on IGL’s margins in the immediate term.

The recent fall in domestic gas allocation to IGL is said to be due to a shift in priorities, with some of the gas now being redirected to support OPAL, an ONGC-run petrochemical facility. At the same time, gas production from older sources has been falling, further constraining domestic supply.

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