Government Boosts Cheaper Gas Supply to City Retailers, Stabilizing Prices

The government has increased cheaper gas supplies to city gas retailers IGL, Adani-Total, and Mahanagar Gas, restoring a significant portion of allocations cut in 2024. This shift aims to stabilize CNG prices and reduce reliance on more expensive alternatives, impacting profitability positively.

The government has decided to boost cheaper gas supplies to city gas retailers, including Indraprastha Gas Ltd (IGL), Adani-Total Gas, and Mahanagar Gas, marking a significant restoration of allocations cut in 2024. Regulatory filings reveal this move aims to stabilize the prices of Compressed Natural Gas (CNG) that had been negatively impacted by prior supply cuts.

Officials explained that previous reductions in APM gas allocations forced city gas retailers to raise CNG prices and consider further hikes as they resorted to higher-priced input fuel. The new reallocation, effective January 16, will see an upward revision of APM gas supplies by up to 31%, substantially increasing the share of cheaper domestic gas in the CNG segment.

This government action is expected to positively impact the profitability of companies involved and stabilize retail prices for end consumers. As gas production from old fields declines, the government is shifting supplies from state-owned GAIL and ONGC to CNG segments to ensure more accessible energy for urban households and commuters.

(With inputs from agencies.)