Fri Oct 18 05:22:26 UTC 2024: ## CNG Prices Set to Rise, Impacting Consumers’ Pockets
**New Delhi:** Commuters and consumers in major cities are bracing for a potential increase in CNG prices, as city gas distribution companies like MGL and IGL are preparing to raise prices. Sources in the industry have revealed that a 20% reduction in gas allocation under the APM (Administrative Price Mechanism) has forced these companies to consider raising CNG prices.
Sources estimate that CNG prices could increase by approximately ₹6 per kilogram. The reduced APM gas allocation has compelled companies to rely on spot LNG, which currently costs $11-$12 per million metric British thermal units (mmbtu) – significantly higher than the $6.5 per mmbtu price of APM gas. This price difference will increase operational costs for these companies.
While the exact impact on consumers remains unclear, it is likely that the increased costs will be passed on to consumers to some extent. Previously, APM gas allocation constituted 69%-70% of the total, but it has now reduced to 49%-50%.
The decline in natural gas production and the increased allocation to ONGC Petro additions Limited (OPaL) are cited as the primary reasons for the reduction in APM gas allocation.
The news of a potential price hike has already impacted the share prices of companies involved in the gas distribution sector. On Thursday, October 17th, IGL shares closed at ₹502.50, down 3.10%, while MGL shares closed at ₹1,763, down 1.33%, and Gujarat Gas shares closed at ₹570.20, down 2.75%.
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