Fitch Ratings on Tuesday cut its India gas consumption outlook for the current fiscal to a growth of 5 per cent as the recent spike in domestic gas prices and high LNG rates would slow the shift to the environment-friendly fuel. The government more than doubled the price of gas from domestic fields to USD 6.1 per million British thermal unit for the six-month period beginning April 1.
“We expect natural gas consumption in India to increase by 5 per cent in FY23 (FY22 estimate: 6.5 per cent), lower from our previous estimate for 7 per cent growth, as the recent sharp increase in domestic gas prices and high LNG prices – both spot and term contracts linked to oil prices – would slow the shift towards natural gas, in our view,” the rating agency said.
Domestic gas production meets roughly half of the current consumption while the remaining is imported in the form of liquefied natural gas (LNG). Fitch said state gas utility GAIL (India) Ltd’s earnings from its natural gas marketing segment are likely to increase due to the recent rise in spot LNG prices to levels much higher than the long-term contracted LNG from US.”
