Fri Oct 18 03:42:49 UTC 2024: ## City Gas Distribution Companies Face Gas Allocation Cut, Shares Plunge
**New Delhi, October 17, 2024:** The shares of Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL), and Gujarat Gas Ltd experienced a significant decline on Tuesday following a reduction in the gas allocation for City Gas Distribution (CGD) companies.
According to exclusive information received by CNBC-TV18, the Administrative Price Mechanism (APM) gas allocation for CGD companies has been slashed by 72% to 50%, marking the largest cut to date. This move is expected to lead to gas price hikes, a challenging prospect given the upcoming elections.
Sources revealed that the reduction in APM gas allocation for CGDs is due to higher demand from private players. The private players have been lobbying for increased allocation and have met with government officials regarding this matter. The cut in allocation is set to come into effect from October 16th.
The reduced gas allocation will likely impact the operations of CGD companies, potentially forcing them to increase CNG prices to maintain profit margins. The shares of IGL, MGL, and Gujarat Gas have taken a significant hit, reflecting investors’ concerns over the impact of the reduced allocation.
IGL shares were trading down by over 2% at Rs. 507.90, MGL shares were down by 1.61% at Rs. 1759, and Gujarat Gas shares tumbled by 3.04% to Rs. 568.
It is noteworthy that the initial allocation for FY24 was at 85%. The current cut represents the largest reduction in allocation since its inception.
This development underscores the challenges faced by CGD companies in a volatile market environment.
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