India's Mahanagar Gas may raise prices if subsidised supply drops more

Indraprastha Gas

06/02/2024 07:20

By Sethuraman N R
       QUITOL, India, Feb 6 (Reuters) - India's city gas
distributor Mahanagar Gas said it will consider hiking gas
prices for customers if a shortfall in subsidised supply
persists, a company executive said.
    Companies including Indraprastha Gas  IGAS.NS , Gujarat Gas
 GGAS.NS , Mahanagar Gas  MGAS.NS  have seen their margins
squeezed because the allocation of natural gas sold under
government-set Administered Pricing Mechanism (APM) has fallen
because of lower output at domestic wells. To make up the
shortfall, the companies have to buy gas on the more expensive
open market. 
    APM allocations are expected to further decline as explorer
Oil and Natural Gas Corp  ONGC.NS  slashed its peak output from
the KG-D6 basin in January.
    "In December, we have seen some disruptions in APM gas
allocations and eventually as the gas demand increases, the
allocations will come down," said Ashu Shinghal, managing
director of Mahanagar Gas.
    "Right now we are absorbing costs, if APM allocations go
down further we will take a call on price hikes," Shinghal said.
    Shinghal expects the company's gas demand to rise by 6% to
7% from a year ago in the fiscal year 2025.
    Demand from the industrial, commercial sector has been good
and Asian liquefied natural gas prices are expected to be
stable, Shinghal added.

 (Writing by Mohi Narayan; Editing by Christian Schmollinger)
 ((Mohi.Narayan@thomsonreuters.com; https://twitter.com/_mohi_;))