The government has reduced domestic natural gas supplies to city retailers, leading to a potential Rs 4-6 per kg increase in CNG prices for automobiles. Legacy field production decline has resulted in supply cuts to city gas retailers, pushing them to purchase costlier imported LNG. Industry experts suggest a 20% reduction in APM gas allocation may cause a Rs 5-5.5 per kg increase in CNG prices.
Delhi and Mumbai, major CNG markets, are likely to be impacted by this decision. To maintain profits, CNG retailers may have to raise prices. Companies like Indraprastha Gas Ltd and Mahanagar Gas Ltd have reported significant reductions in domestic gas allocations, which could affect their profitability.
The government’s move to divert gas to the ONGC-promoted OPaL petrochemical plant in Gujarat has led to the shortage. Options being explored include sourcing alternative domestic gas supplies to ensure price stability for customers. Adani Total Gas Ltd has also reported a 16% reduction in APM gas allocation.
As retailers continue discussions with stakeholders, a solution to the gas supply issue is critical to avoid passing on increased costs to consumers.
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