City gas distribution firms, including Indraprastha Gas and Mahanagar Gas, would have to check the prices of CNG used by cars and domestic Petrochemicals due to budget cuts in cheaper APM gas.
APM Gas Share for City Distributors Like IGL and MGL to Drop Further from April 16
City gas distribution (CGD) companies, including major players like Indraprastha Gas Limited (IGL) and Mahanagar Gas Limited (MGL), are facing a fresh challenge as the government prepares to further reduce the allocation of cheaper Administered Price Mechanism (APM) gas, starting April 16, sources told Moneycontrol.
The move is expected to raise input costs for CGD firms, which in turn could lead to another round of price hikes for Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) used in households.
IGL’s APM Allocation for CNG to Fall to 40%
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According to a source familiar with the matter, IGL’s allocation of APM gas for CNG will drop to 40% from the current 51%. While an official government notification is still awaited, the changes are reportedly being communicated to the companies.
“We are concerned about the instability in APM allocation policy,” the source said. “We have been informed that APM gas will be replaced by new-well gas, which may be more expensive.”
Price Revisions on the Horizon
The reduced availability of subsidized gas is likely to drive CNG and PNG prices higher, as companies pass on the increased cost burden to consumers.
“The cut is unexpected—it was supposed to be gradual, in line with CGD volume growth,” said Harshraj Aggarwal, Executive Vice President at Yes Securities. “We now expect CGD companies to implement further price hikes.”
MGL Taking a Wait-and-Watch Approach
Ashu Shinghal, Managing Director of Mahanagar Gas, confirmed that the company is closely watching the developments. “We will wait for the final announcement. We’ll decide on pricing accordingly and may have to make adjustments,” he said.
Background: Why APM Gas Matters
APM gas is supplied by state-run producers like ONGC at government-determined lower prices, mainly for use in transport and household segments. It helps keep CNG and PNG prices affordable.
The gradual replacement of APM gas with higher-priced alternatives like new-well gas or imported LNG is part of a broader energy pricing reform. However, any abrupt cuts can disrupt planning for CGD companies and put upward pressure on consumer prices.
