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City gas companies snap up cheap local supply - Economic Times

Economic Times · last updated July 24, 2023 – 2:33 PM

City gas companies snap up cheap local supply - The Economic Times

The city gas sector accounted for just 9% of the country's consumption of imported gas during the April-June period, down from 17% a year earlier. Their consumption of domestic gas rose 31% in a year to 2,490 million metric standard cubic meter (mmscm) while their use of imported gas fell to 703 mmscm.

Higher domestic gas consumption by city gas distributors meant lower availability of local supplies for the fertiliser sector. Fertiliser makers consumed 4,276 mmscm of imported gas in the quarter compared to 3,416 mmscm a year earlier. Their use of domestic gas dropped 43% to 726 mmscm. The fertiliser sector is the largest consumer of natural gas in the country while the city gas sector is the second-largest.

The refineries and power plants, the third- and the fourth-largest consumers of natural gas, respectively, also consumed more gas from overseas in the June quarter.

The government's move to increase the allocation of cheaper domestic gas to city gas has helped cut

city gas companies'

reliance on imports. The imposition of a price ceiling of $6.5 per mmbtu on domestic gas in April has also made it attractive to consumers. City gas distributors supply domestic gas to CNG vehicles and for cooking at home.

Lower natural

gas prices have helped boost margins for city gas companies.

Indraprastha Gas Ltd, which operates in the national capital region, made a gross margin of ₹14.4 per standard cubic meter during the quarter, higher than ₹12 in January-March and ₹14.3 in the April-June quarter of last year, as per ICICI Securities. CNG comprises 75% of IGL's total sales volume.

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City gas companies snap up cheap local supply - Economic Times

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