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CNG Price: Indraprastha Gas Limited (IGL) said further reduction in domestic gas supply to CNG companies could impact its profits. For the second time in a month, the government has reduced the supply of cheaper domestically produced natural gas to retail CNG sellers. The company, which supplies CNG to vehicles and piped cooking gas to homes in the capital Delhi and surrounding cities, said in its information to the stock market that since November 16, the domestic supply has declined by about 20 percent.
The price of imported gas is double that of domestic gas.
Earlier, since October 16, supplies had been cut by about 21 percent. IGL said, ‘Based on other information received by the company from GAIL (India) Limited (nodal agency for domestic gas allocation), further reduction in domestic gas allocation to the company has been made with effect from November 16, 2024. IGL said the revised domestic gas allocation is about 20 per cent less than the earlier allocation, which will have a direct impact on the company’s profits. IGL receives domestic gas allocation at a government fixed price (currently $6.5 per million British thermal units). The alternative is imported gas, which costs twice the domestic price.
First 21 percent cut and now
CNG prices are likely to rise in the near future after 20 per cent price cut twice in a month and IGL hinting at a decline in profits. The government has reduced the supply of cheap gas to city gas distribution companies selling CNG to vehicles, first by 21 percent and now by 20 percent. After this step of the government, the dependence of companies on expensive imported fuel will increase. To meet the shortage of cheap gas, companies have to buy expensive gas. Due to which the prices of CNG may increase.
CNG prices likely to increase by this much
Recently, when the government reduced the supply of cheap natural gas, rating agency ICRA expressed the possibility that companies may increase the retail price by up to Rs 50. There may be an increase from 5 to 6. But even after almost a month there has been no change in the price. But this time after this statement of IGL, it will have a direct impact on its profits. CNG prices may increase now. It is expected that IGL CNG prices will increase by Rs 20 to maintain profits. There may be an increase from 5 to 6.