Mon Nov 18 07:38:28 UTC 2024: ## City Gas Companies Face CNG Price Hike After Government Supply Cuts

**New Delhi, November 20, 2024** – India’s city gas distribution (CGD) companies are facing pressure to raise CNG prices following significant cuts in government-supplied natural gas. The Ministry of Petroleum and Natural Gas reduced the allocation of cheaper, domestically produced gas by 20% effective November 16th, following a 21% cut in October. This has impacted major players like Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL), and Adani Total Gas Ltd.

The reductions, attributed to the natural depletion of older gas fields, have left companies scrambling to source more expensive alternatives. IGL, for example, stated the cut will “adversely impact the company’s profitability,” while Adani Total Gas reported a 13% supply reduction and MGL an 18% decrease. Industry sources suggest a potential CNG price hike of ₹4-6 per kg to offset increased costs.

However, the government is resisting the price increases, citing the substantial profits reported by these companies. Officials point to IGL’s 11% profit margin and MGL’s approximately 17% profit margin in the fiscal year ending March 31, 2024, arguing that they should absorb the additional costs. The government is demanding a cost breakdown from the retailers to justify any price hikes, stating that while profits are acceptable, transparency is crucial. They emphasize that the companies should be open about the pricing structure if they are to continue receiving low-cost government gas allocations.

The reduced supply of cheaper gas affects CNG primarily, while the supply for piped household cooking gas remains protected. The government’s policy aims to prioritize domestic usage of natural gas. The situation highlights the ongoing challenges in balancing the needs of city gas retailers with the government’s efforts to manage dwindling supplies of domestically produced natural gas. The potential price hike remains a subject of ongoing discussion between the CGD companies and government officials.

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