Indraprastha Gas to increase capex by 20% in FY26, eyes acquisition of smaller CGD firms: Managing Director KK Chatiwal

IGL has 11 GAs across 32 districts in four states, catering more than 21 percent of the demand of the CGD sector.

Indraprastha Gas Ltd (IGL) is planning a 20 percent year-on-year increase in capital expenditure for the financial year 2025-26 (FY26), focusing on inorganic growth, its Managing Director Kamal Kishore Chatiwal told Moneycontrol.

The City Gas Distribution (CGD) company’s total capex in the current financial year ending March 2025 would be around Rs 15,000 crore to Rs 16,000 crore.

“We are looking at some diversification opportunities, both in core business and the renewables space. We expect next year’s capex to be on the higher side,” said Chatiwal. The capex would be funded through internal generation.

IGL is planning to acquire smaller CGD companies to increase the number of geographical areas (GAs) under the company. “This will be one area we will be working on. We have only 11 GAs. We would like to increase that number,” said Chatiwal.

IGL has 11 GAs across 32 districts in four states, catering to more than 21 percent of the demand of the CGD sector, according to the company’s annual report 2023-24.

Q3 show

The company on January 27 reported a 31 percent year-on-year decline in consolidated net profit in the third quarter of FY25 as the government cut allocation of cheaper Administered Price Mechanism (APM) gas allocation to CGD players.

Despite lower profits, the CGD company’s volume remained healthy. In the quarter, IGL’s total volumes rose 7 percent to 8.33 million metric standard cubic metre per day (mmscmd), while Compressed Natural Gas (CNG) volumes grew by 7 percent and Piped Natural Gas (PNG) volumes—including domestic and industrial use—rose 9 percent.

CNG prices

The call on revision of CNG prices would be dependent on several factors including sourcing of gas, Value Added Tax (VAT) levied by states and competitive pricing, said Chatiwal.

CGD players had hiked CNG prices for consumers after the government cut cheaper APM gas allocation.

The government on October 16 had reduced APM gas allocation for the CNG segment from around 68 percent to 50.75 percent and further to 37 percent on November 16. CGD companies had to rely on costlier sourcing options including High Pressure High Temperature (HPHT) and spot gas, which has hit their margins.

However, in January, APM gas allocation for the CNG segment raised to 51.48 percent. Chatiwal expects APM gas allocation to CGD players to remain constant going forward.

APM gas is sold at cheaper price to CGD players in the country to ensure essential services such as domestic PNG and CNG. According to government data, APM gas is sold at $6.5 per mmBtu while HPHT gas costs $10.16 per mmBtu.