Recent price cuts by city gas distribution (CGD) companies and a statement issued by the petroleum minister citing high profits have had a negative impact on sentiment about the sector. It has resulted in sharp dips in the share prices of Mahanagar Gas (MGL), Indraprastha Gas (IGL), and Gujarat Gas.
However, the Petroleum and Natural Gas Regulatory Board (PNGRB) has subsequently clarified that it does not intend to regulate CGD margins. Also, there has been a fall in liquefied natural gas or LNG prices, which is being passed on in the price cuts. As a result, we could make a case that the market has overreacted.
Price Low spot LNG prices partially offset the under-allocation of lowcost Administered Mechanism (APM) gas for CNG/domestic piped natural gas (PNG) segment and improves the competitiveness of gas versus alternative liquid fuels. This is likely to boost domestic LNG demand.
The total CGD demand is flat month on month as the reduction in APM allocation has been offset by higher LNG consumption. January 2024 consumption was 37.5 million standard cubic metre per day (mscmd) vs 38.1 mscmd in December last year.
This story is from the March 12, 2024 edition of Business Standard.
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This story is from the March 12, 2024 edition of Business Standard.
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