Government partially restores gas supply to IGL, Adani-Total

The government has increased the supply of cheaper gas to Delhi's gas retailers IGL (Indraprastha Gas Ltd), Adani-Total, and Mahanagar Gas, restoring much of the allocation that was cut in 2024, according to regulatory filings by the companies.

In October and November last year, the government had reduced supplies of APM (administered pricing mechanism) gas (low-priced natural gas from old fields such as Mumbai High and Bassein fields in the Bay of Bengal) to city gas retailers by as much as 40 per cent, citing limited output. This led to price hikes of Rs 2-3 per kg for CNG and plans for further increases as retailers replaced lost volumes with higher-priced input fuel. As a result, CNG became less attractive compared to alternatives like diesel.

In response, the ministry of petroleum and natural gas issued a 31 December 2024 order, revising some gas allocations. The ministry cut gas supplied to state-owned GAIL (Gas Authority of India Ltd) and ONGC (Oil & Natural Gas Commission) for LPG (liquid petroleum gas) production, diverting those volumes to city gas entities.

Of the total 2.55 million standard cubic meters per day of gas used for LPG production, 1.27 mmscmd (0.637 mmscmd each for GAIL and ONGC) was ordered to be redirected for CNG/piped cooking gas consumption in the January-March quarter.

Delhi gas retailers have reported that increased volumes of APM gas will begin flowing on 16 January. According to IGL, the revised allocation represents a 31 per cent increase, raising the share of domestic gas in CNG from 37 per cent to 51 per cent. The company also secured additional volumes of imported LNG at competitive prices.

IGL stated that this revision and new contracts will positively impact profitability. Adani-Total Gas Ltd confirmed a 20 per cent increase in APM gas allocation, effective 16 January, which will help stabilise retail prices for consumers.

Mahanagar Gas Ltd announced a 26 per cent increase in APM gas allocation, raising the proportion of domestic gas in its CNG supply from 37 to 51 per cent. GAIL and ONGC, in turn, will use either higher-priced gas from new fields or rely on imported LNG to cover the volumes lost to city gas retailers. The LPG produced by GAIL and ONGC will continue to be supplied to fuel retailers like Indian Oil Corporation (IOC) for domestic cooking gas.