
NEW DELHI: The government has increased the supply of cheaper gas to city gas retailers IGL, Adani-Total, and Mahanagar Gas, restoring much of the allocation that was cut in 2024, according to regulatory filings by the companies.
In October and November last year, the government had reduced supplies of APM Gas (low-priced natural gas from old fields such as Mumbai High and Bassein fields in the Bay of Bengal) to city gas retailers by as much as 40%, citing limited output. This led to price hikes of Rs 2-3 per kg for CNG and plans for further increases as retailers replaced lost volumes with higher-priced input fuel. As a result, CNG became less attractive compared to alternatives like diesel.
In response, the Ministry of Petroleum and Natural Gas issued a December 31, 2024 order, revising some gas allocations. The ministry cut gas supplied to state-owned GAIL and ONGC for LPG production, diverting those volumes to city gas entities.
Out of the total 2.55 million standard cubic meters per day of gas used for LPG production, 1.27 mmscmd (0.637 mmscmd each for GAIL and ONGC) was ordered to be redirected for CNG/piped cooking gas consumption in the January-March quarter.
City gas retailers have reported that increased volumes of APM gas will begin flowing on January 16.
According to Indraprastha Gas Ltd (IGL), the revised allocation represents a 31% increase, raising the share of domestic gas in CNG from 37% to 51%. The company also secured additional volumes of imported LNG at competitive prices. IGL stated that this revision and new contracts will positively impact profitability.
Adani-Total Gas Ltd confirmed a 20% increase in APM gas allocation, effective January 16, 2025, which will help stabilize retail prices for consumers.
Mahanagar Gas Ltd announced a 26% increase in APM gas allocation, raising the proportion of domestic gas in its CNG supply from 37% to 51%.
GAIL and ONGC, in turn, will use either higher-priced gas from new fields or rely on imported LNG to cover the volumes lost to city gas retailers. The LPG produced by GAIL and ONGC will continue to be supplied to fuel retailers like Indian Oil Corporation (IOC) for domestic cooking gas.
The government subsidizes domestic LPG, and the higher production costs are likely to be absorbed by the government. The gas supply cuts had earlier reduced the availability of APM gas for city gas retailers by up to 5.25 mmscmd. Half of this supply is being restored immediately, with more expected once gas from the Ramnad field and new wells come online.
Natural gas pumped from both legacy fields and new offshore sites serves as the raw material for CNG and piped cooking gas. The production of APM gas, however, has been declining at an annual rate of up to 5% due to natural field depletion, leading to reduced supplies for city gas retailers.