City gas distributor Indraprastha Gas (IGL) is not looking to increase compressed natural gas (CNG) prices further, managing director Kamal Kishore Chatiwal told Moneycontrol on June 6, after hiking consumer prices thrice in the last six months.
Chatiwal, however, cautioned that any abnormal rise in international prices may prompt IGL to review domestic prices. The allocation of cheaper administered price mechanism (APM) gas to IGL has been reduced to 33 percent currently, from 68 percent in September 2024.
“As of now, we are not contemplating a price increase (for CNG). But, in case, geopolitical situation worsens and RLNG (regasified liquified natural gas) prices shoot up, we will be left with no other option. Variations in (RLNG) prices in the range of 2-3% can be managed by us,” said Chatiwal.
This decision is contrary to IGL’s peer Mahanagar Gas (MGL) which raised CNG prices by Rs 0.5 per kg to Rs 80 per kg on June 1. IGL’s retail CNG prices are Rs 77.09 per kg in Delhi, Rs 85.70 per kg in Noida and Rs 83.12 per kg in Gurugram.
Chatiwal said he expects the allocation of APM gas to further decline in coming years due to falling production from India’s legacy fields. IGL is, therefore, strategising to enter into contracts in order to provide gas to consumers closer to APM prices.
CGD players including IGL, MGL and Adani Total Gas have undertaken multiple CNG price hikes in-line with the cut in allocation of cheaper domestic gas. APM gas is sold cheaper to city gas distribution players to ensure essential services such as domestic PNG and CNG.
In line with the low crude oil prices, the Centre has slashed APM gas prices to a two-year low of $6.41 per million metric British thermal unit (mmBtu) in June from earlier $6.75 per mmBtu.
Chatiwal said the recent cut in APM prices would help the company in covering additional operational costs but would not reflect in retail CNG prices. “Minimum wages and maintenance costs are increasing every year. The benefit is not too much. The (APM) price has only reduced by $0.35 per mmBtu,” said Chatiwal.
IGL had increased CNG prices by Re 1-4 per kg during May, April and November 2024, respectively, across different locations.
Financial Performance
On account of rising input costs, IGL reported an almost nine percent on-year fall in standalone net profit in Q4FY25.
“The major reason was the drastic reduction in APM allocation…and then there was the impact of rupee depreciation as well,” said Chatiwal, explaining the decline in the bottomline.
Currently, IGL meets 50 percent of its total requirement from domestic gas which includes APM gas (33 percent), new well gas (10 percent) and high-pressure high-temperature (HPHT) gas (6-7 percent), while the rest is RLNG.
IGL is currently procuring RLNG in the range of $10-$11 per mmBtu. Meanwhile, price of HPHT gas is $10.04 per mmBtu and the new well gas is priced at 12 percent of Indian crude basket.
The government has cut the allocation of APM gas to CGD companies due to depleting domestic production. In October 2024, the government reduced APM gas allocation to the CNG segment to 50.75 percent from 68 percent and further to 37 percent in November 2024.
CGD companies had to rely on costlier sourcing options, including HPHT and spot gas, which ate into their margins. In January 2025, APM gas allocation for the CNG segment was raised to 51.48 percent but was again slashed to around 33 percent in April 2025.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
