GAIL cuts cheap gas supply, replaces with costlier option

State-owned gas major GAIL has slashed the allocation of administered price mechanism (APM) gas by up to 20 per cent, replacing it with equal or more volumes of pricier New Well Gas (NWG), city gas distribution (CGD) firms said.

- SUBHAYAN CHAKRABORTY

While CGDs said the move will hit their profitability, Petroleum Ministry officials said the move was expected, and was in line with the government's ongoing move to reduce the share of APM gas.

From Wednesday, GAIL has slashed APM gas allocation by 18 per cent and 20 per cent respectively, to Mumbai-based Mahanagar Gas, and Delhi-based Indraprastha Gas, while Adani Total Gas, which serve areas in Gujarat, will now get 15 per cent less APM gas, the companies said in separate stock exchange filings.

But GAIL will also provide up to 1.25 times the allocation it has cut, through NWG to IGL, while the other two CGD firms will see their volumes replaced.