CNG price may go up by Rs 1/kg on hike in GAIL pipeline tariffs, says MGL MD

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26 Aug, 2025 12:21

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The rise in tariffs for GAIL pipelines can have positive as well as negative effects, depending on the location. While some may benefit from the increase, others may experience losses, Ashu Shinghal, managing director, Mahanagar Gas Ltd (MGL), told CNBC TV18 in an interview.

If the hike is passed on, it may result in a Rs 1/kg increase in CNG prices, Shinghal said.

On March 22, the Petroleum and Natural Gas Regulatory Board (PNGRB) said the integrated tariff for natural gas pipelines of GAIL (India) is set to increase to Rs 58.61 per metric million British thermal unit (MMBtu). The new tariff, which is 45 percent higher, will be effective April 1, 2023. PNGRB had proposed a 41 percent hike at Rs 60.92/mmbtu earlier in the month for the state-owned gas distribution company.

JPMorgan India's Pinakin Parekh told CNBC-TV18 that the tariff hike was positive for GAIL, as it would result in higher earnings and margins.

The hike was aimed at incentivising GAIL to expand its pipeline network and improve connectivity between the gas-rich eastern region and demand centres in other parts of the country, he said. It would create a win-win situation for both GAIL and its customers.

Parekh, however, also said the hike could result in higher prices of compressed natural gas (CNG) and piped natural gas (PNG) for consumers. Higher prices would be a worry, especially for small and medium enterprises, as it could lead to higher costs and reduce competitiveness, he said.

Pawan Kumar, director-commercial, IGL, said in a separate interview that if the recommendations of the Kirit Parikh Panel were implemented, gas prices could fall by $1/mmBtu. However, the input gas cost was expected to go up 80-85 paise/scm.

The government has set a target to enhance the utilisation of natural gas and increase its contribution to the energy mix from 6.2 percent to 15 percent by 2030. However, in the recent period, spot prices for liquified natural gas (LNG) have dropped nearly 50 percent to $14 MMBtu. The drop has been attributed to the mild winter and high inventory in Europe, in contrast to the recent peak of $45 per mmBtu.