Natural Gas Allocation Shift Sparks Debate Amid Rising CNG Prices

The government has shifted natural gas allocation from LPG production to city gas entities, impacting CNG pricing. This shift, intended to alleviate supply constraints, saw prices rise by Rs 2-3 per kg. The Ministry of Petroleum has ordered additional diversions to ease city gas retailer operations.

The government has implemented a significant shift in natural gas allocation, diverting supplies from LPG production to city gas retailers, including Indraprastha Gas Ltd and Adani-Total Gas Ltd, according to an official order. This strategic realignment is aimed at bolstering the supply for CNG and piped cooking gas.

In response to reduced domestic gas output last year, city gas retailers experienced a 40% cut in supplies, triggering a Rs 2-3 per kg increase in CNG prices and suggesting further hikes. The Ministry of Petroleum and Natural Gas addressed the pricing issue on December 31, redirecting gas allocations from state-owned entities GAIL and ONGC.

The reallocation affects 1.27 mmscmd of gas, previously reserved for LPG production, to the city gas sector for the January-March period. This adjustment seeks to restore around half of the supply lost due to cuts, aiding city gas retailers in managing input costs until further increases from new wells are realized.

(With inputs from agencies.)