ET Intelligence group: The proposal by a high-powered committee to the Ministry of Petroleum and Natural Gas (MoPNG) to withdraw the facility of allocating low-priced domestic gas is likely to impact city gas distributors (CGD) including Indraprashtra Gas (IGLNSE -1.58 %), Mahanagar Gas (MGLNSE 0.27 %), and Gujarat Gas.
The proposal may result in 40-45 per cent jump in gas prices thereby reducing the attractiveness of alternative fuels. Compressed natural gas (CNG) is 31-36 per cent cheaper than Petrol and diesel. The risk of volume contraction will be the highest for IGL as its domestic gas accounts for more than 75 per cent of its sales volume.
The withdrawal of the facility would force CGD companies to increase the proportion of higher priced imported gas. The imported gas costs around Rs 37.8 per kg, nearly double that of the domestic gas.