The viability of ₹50,000 crore capital expenditure planned in the city gas distribution (CGD) space over the next four years has improved with the price of liquefied natural gas (LNG) expected to be subdued during the period.
LNG accounts for nearly half of CGD consumption volume, and a lower price augurs well for both volumes and operating margins of distributors, and consequently, project returns.
Coronovirus outbreak
Spot prices of LNG have more than halved to a decadal low of less than $3 per million metric British thermal units (mmBtu) in February because of oversupply and more recently, the Coronavirus outbreak.
That has sharply improved the competitiveness of piped natural gas (PNG) compared with furnace oil, liquefied petroleum gas and gasoline, prices of which are typically linked to crude oil.
