Government Curbs Gas Supply, CNG Prices Likely to Rise

18 Oct 2024 , 11:57 AM

The cost of compressed natural gas (CNG) may climb across the country after the government reduced the allotment of cheaper domestic gas to city gas distributors by around 20%.

The latest decrease was necessary after the government allowed ONGC to use additional output from its legacy gas assets for petrochemical manufacture. This lowered the amount of domestic gas available to city gas players.

The government distributes price-controlled domestic gas, or APM gas, to city gas distributors for subsequent sale to CNG drivers and families. The new allocation drop will not impair residential supplies, but it may raise CNG pricing, according to city gas executives who talked to ET.

Indraprastha Gas Ltd, the country’s largest city gas distributor, has stated that it has received 21% less APM gas since October 16, which “will have an adverse impact on the profitability of the company.”

For IGL and other major city gas operators, the share of cheaper domestic gas has now dropped to around 50% of CNG sales. This is significantly lower than the previous day’s figure of roughly 68% and the October figure of around 88%.

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