APM gas price cut likely to aid city gas profitability

The recent reduction in prices of domestic gas is likely to improve profitability of the country's city gas distribution companies, analysts believe.

- Arunima Bharadwaj

"If prices (of CNG/PNG) are not revised then profitability will only improve because lately it has been impacted owing to reducing proportion of the APM (Administered Pricing Mechanism) gas," said Prashant Vasisht, senior vice-president and co-group head, Icra.

The government reduced the prices of APM gas for the first time in two years following a decline in the benchmark rates after it introduced a new gas pricing formula for such gas in 2023.

As per the official notification, the price of natural gas from legacy fields allocated to state-owned Oil and Natural Gas Corp has been reduced to $6.41 per million British thermal units (mmBtu) from $6.75 earlier.