The federal government has actually reduced by approximately 20 percent the products of less expensive locally created gas to city merchants– a relocation that might lead to Rs 4-6 per kg walk in the rate of CNG marketed to cars, unless import tax obligation on the gas is reduced, resources stated.
Natural gas pumped from listed below the ground and from under the seabed from websites varying from the Arabian Sea to Bay of Bengal within India is the raw product that is developed into CNG offer for sale to cars and piped cooking gas to families.
Production from heritage areas, whose rate is controlled by the federal government and which are made use of to feed city gas merchants, has actually been dropping by approximately 5 percent each year as a result of all-natural decrease that has actually embeded in. This has actually caused provide cuts to city gas merchants, 4 resources in recognize of the issue stated.
While the input gas for piped food preparation gas that families obtain is safeguarded, the federal government has actually reduced supply of resources for CNG. Gas from heritage areas made use of to fulfill 90 percent of the need for CNG in May 2023 and has actually considerably dropped. The supply was reduced to simply 50.75 percent of the CNG need start October 16 from 67.74 percent last month, they stated.
City gas merchants are required to acquire imported and more expensive dissolved gas (LNG) to offset the shortage, which will certainly bring about a walk in CNG costs that differs from Rs 4-6/ kg.
The gas from heritage areas is valued at USD 6.50 per million British thermal device (mmBtu) as versus imported LNG that sets you back USD 11-12 per mmBtu.
For currently, the merchants have actually not increased CNG prices as they are involved with the Ministry of Petroleum and Natural Gas to locate a remedy, resources stated.
One of the choices is for the federal government to reduce import tax obligation on CNG. Currently, the main federal government levies a 14 percent import tax obligation on CNG, which converts right into Rs 14-15 per kg. If this is reduced, the merchants will certainly not need to hand down the enhanced price to customers, they stated.
CNG rate walk is additionally a political problem given that Maharashtra mosts likely to the surveys following month and political elections are additionally due in Delhi quickly. Delhi and Mumbai are amongst the most significant CNG markets in the nation.
Sources stated the gas products to city gas merchants needed to be reduced after the federal government determined to recover gas to ONGC-promoted OPaL petrochemical plant in Dahej, Gujarat.
The plant was initially alloted 4.12 million conventional cubic meters daily of locally created gas. However, the appropriation for different factors was reduced to 1.95 mmscmd and throughout Covid was cut in half.
Lack of assured residential gas was the major factor for OPaL facing losses, resources stated, including that the federal government has actually currently accepted a plan to revitalize the device. This plan consists of marketer Oil and Natural Gas Corporation (ONGC) instilling added Rs 10,501 crore as equity and the device being provided locally created gas.
The Union Cabinet accepted the appropriation of 3.44 mmscmd of residential gas– mainly originating from brand-new wells of ONGC. This caused minimal gas being offered for city gas merchants.
Girish Kadam, Senior Vice President & & Group Head– Corporate Ratings, Icra Ltd, stated, “The APM gas allocation has been reduced for the CGD sector by 20 per cent of the current domestic gas consumption by the sector. The reduction in APM allocation will have to be replaced by more expensive HPHT gas or (imported) LNG, which will push the overall gas costs for the sector.”
To keep payment margins at existing degrees, CNG costs will certainly need to be enhanced around Rs 5-5.5 per kg.
Indraprastha Gas Ltd, which retails CNG in the nationwide funding, and Mumbai- based Mahanagar Gas Ltd in governing filings mentioned that products of locally created gas, which was offered at a capped price fifty percent of the imported rate, has actually been reduced.
“The company gets domestic gas allocation for meeting the requirement of CNG sales volumes at the pricing fixed by the government (presently at USD 6.5 per million British thermal unit). Based on communication received by the company from GAIL (India) Ltd (the nodal agency for domestic gas allocation), this is to inform that there has been a major reduction in domestic gas allocation to the company effective from October 16, 2024,” IGL stated in a declaring.
The modified residential gas appropriation to IGL has to do with 21 percent much less than previous appropriation, “which will have an adverse impact on profitability of the company”, it stated, including that it remains in conversations with essential stakeholders to reduce the influence.
Separately, MGL stated based on Policy Guideline dated August 10, 2022, released by the Ministry of Petroleum and Natural Gas, locally created Administrative Price Mechanisms (APM) gas is to be alloted to city gas circulation (CGD) firms for top priority sections, especially residential piped gas and CNG (transportation).
The plan specifies that the supply of residential gas to CGD entities will certainly be made just approximately the amount offered and alloted to GAIL (India) restricted for these sections.
“…the company is exploring options of sourcing gas through domestically produced high pressure high temperature (HPHT) gas, new well/well intervention gas (NWG) from ONGC and benchmark-linked long-term gas contracts, so as to continue to provide gas to its customers with price stability,” MGL included.
Adani Total Gas Ltd– the various other substantial city gas seller– in its declaring stated the APM valued residential gas appropriation to the business has actually been minimized by around 16 percent, reliable October 16, 2024, contrasted to the earlier appropriation.
“While the company shall take all steps needed to optimise the profitability, it may however be noted that pending the resolution, there would be an adverse impact on the profitability of the company,” it stated.
(This tale has actually not been modified by News18 personnel and is released from a syndicated information firm feed – PTI)
