The government has reduced the low -cost government gas supply to companies like Indraprastha Gas Limited (IGL), Metropolitan Gas Limited (MGL) and Adani Total Gas Limited (AGL) by up to 20 percent. Companies are now compensating this deduction with more expensive fuel. The three urban gas distributors have informed the stock market in this regard that the public sector nodal agency GAIL (India) Limited has informed them about cutting the supply of APM (Administrative Price Mechanism) gas.
What is APM Gas?
APM gas is the natural gas that the government fixes from time to time. Currently the price of APM gas is $ 6.75 per million British thermal unit (MMBTU).
Why is the cut being cut?
The production of APM gas is decreasing at the rate of 9-10 percent every year. Oil and Natural Gas Corporation (ONGC) is investing in excavation of more wells to maintain production, which is increasing the cost of production. The price of gas released from the new excavation is around $ 8 per unit. In the last one year, the supply of APM gas has been cut by about 50 percent.
How many gas will be available now?
After the deduction, now APM gas will be able to meet only 34 percent of the demand for urban gas supply, which was 51 percent earlier. Indraprastha Gas Limited (IGL) has informed that the gas that was received for the supply of domestic gas and CNG at the fixed price of the government has been cut by 16 April 2025 to 20 percent.
The company said that to make up for this shortage, it has been allotted a gas (125% additional) from the new wells. But this will increase the cost of the company and there is a possibility of decrease in profit.
Will CNG price increase?
The cost of companies is set to increase due to cuts in APM gas supply and compensation for expensive gas. In such a situation, companies like IGL, MGL and AGL are expected to increase CNG prices in the near future to prevent the decline in profits.
Companies strategy
IGL has clarified that it is considering various measures to reduce this effect, but currently the company’s profits may be adversely affected due to reduction in gas supply and cost increase.
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