Consumers might pay more for CNG in coming months as city gas cos see cost increase by Rs 2-3/kg on lower APM allocation

Following a reduction in allocation under the Administered Price Mechanism (APM), the gas procurement cost of city gas distribution (CGD) companies is set to increase by Rs 2-3 per kilogram (kg). These companies get priority gas allocation at reduced prices under APM from legacy gas fields for the domestic compressed natural gas (CNG) and piped natural gas (PNG) – domestic segments.

According to recent public announcements by these companies, GAIL (India) Ltd has reduced the APM gas allocation for the CNG segment by around 20 per cent of their CNG requirement, effective October 16, 2024. It is worth noting that APM allocation for CGD players will now be reduced to approximately 50 per cent of their CNG requirement, from the allocation level of around 70 per cent this fiscal year so far.

Also ReadNTPC plans to award 13.6 GW of thermal capacity by FY27

As a result, in order to maintain adequate supply, the CGD players will need to procure gas from costlier sources such as domestic high pressure, high temperature (HPHT) gas fields or imported liquefied natural gas (LNG).

Also Read Gold loans should take off by Nov: Shriram Finance CEO Indian apparel exporters to report revenue growth of 9-11% in FY25, capex spends to increase too in FY25 and FY26 Bond yields likely to ease further Blue Dart to implement general price increase from Jan 1, prices to go up by 9-12%

Ankit Hakhu, Director, CRISIL Ratings, said, “Against the current APM gas prices of $6.5 per metric million British thermal unit (MMBtu), HPHT gas prices are $9.5 per MMBtu and LNG prices are $11-12 per MMBtu. This means the cost of input gas for the CNG segment of CGD players is likely to increase by Rs 3.5-4.5 per kg. However, given that the share of CNG in the overall CGD segment is around 60 per cent, the overall cost of gas procurement may rise by Rs 2-3 per kg for industry players.”

Now in order to maintain profit margins, players are likely to pass through the increased cost to consumers by increasing the selling price of CNG, although in a gradual manner in the coming months. Some players have already undertaken partial increases in CNG prices.

 » Read More

Related Articles

8th Pay Commission: Central govt to merge pay scales for Level 1-6 employees? Here’s what the new proposal says

8th Pay Commission: The National Council of Joint Consultative Machinery (JCM) Staff Side has submitted its recommendations for the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC), advocating significant changes in pay structure, allowances and benefits for government employees. Among the key points of ToR is the proposal for merger of certain

Bharti Airtel Q3 Results: Profit surges 505.24% to Rs 14,781.20 crore, ARPU at Rs 245

Bharti Airtel on Thursday posted a profit of Rs 14,781.20 crore during the third quarter of FY25, reporting a growth of 505.24 per cent in comparison to Rs 2442.20 crore during the corresponding quarter of FY24. The telecom major recorded Q3 revenue from operations at Rs 45,129.30 crore, up 19.08 per cent as against Rs

JB Pharma is riding the CDMO Opportunity. Jefferies reiterates buy…

Jefferies has maintained a Buy on JB Pharma with a revised target price of Rs 2,310. The stock currently trades at Rs 1,714/share implying an 34% upside. This new target price is just a shade lower than the previous target price of Rs 2,340. According to Jefferies, an international brokerage house, the growth drivers are

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

8th Pay Commission: Central govt to merge pay scales for Level 1-6 employees? Here’s what the new proposal says

8th Pay Commission: The National Council of Joint Consultative Machinery (JCM) Staff Side has submitted its recommendations for the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC), advocating significant changes in pay structure, allowances and benefits for government employees. Among the key points of ToR is the proposal for merger of certain

Bharti Airtel Q3 Results: Profit surges 505.24% to Rs 14,781.20 crore, ARPU at Rs 245

Bharti Airtel on Thursday posted a profit of Rs 14,781.20 crore during the third quarter of FY25, reporting a growth of 505.24 per cent in comparison to Rs 2442.20 crore during the corresponding quarter of FY24. The telecom major recorded Q3 revenue from operations at Rs 45,129.30 crore, up 19.08 per cent as against Rs

JB Pharma is riding the CDMO Opportunity. Jefferies reiterates buy…

Jefferies has maintained a Buy on JB Pharma with a revised target price of Rs 2,310. The stock currently trades at Rs 1,714/share implying an 34% upside. This new target price is just a shade lower than the previous target price of Rs 2,340. According to Jefferies, an international brokerage house, the growth drivers are

Two banking stocks to watch ahead of the RBI Policy

By Kiran Jani Bank Nifty reached its all-time high of 54,467 in September 2024. Following this peak, the index experienced a correction, dipping to 47,844 in January 2025—a decline of 7.29%. Despite this pullback, Kotak Bank and ICICI Bank showed relative resilience, delivering returns of 1.61% and -4.20%, respectively, during the same period. Source: Investing.com

New Tax Regime: These deductions, exemptions still available for you

The Indian government introduced a new tax regime in 2020, offering lower tax rates while removing several exemptions and deductions available under the old system. Initially optional, this regime became the default in 2023, requiring taxpayers to opt out if they wished to continue under the old structure. Despite the removal of many benefits, certain