The government’s decision to limit prices of domestic natural gas from legacy fields to between USD 4-6.5 per million British Thermal Unit (mmbtu) will support margins for city gas distributors, encourage the use of gas, and reduce cash flow volatility for upstream producers, Fitch Ratings said on Wednesday.
“We expect a partial pass-through of the lower administered price mechanism (APM) gas prices, at which domestic upstream producers supply gas to city gas distributors, in the prices of compressed natural gas (CNG) and domestic piped natural gas (PNG) to add to the distributors’ margins in the near term,” it said in a statement.
City gas retailers like Indraprastha Gas Ltd and Adani Total Gas Ltd last weekend announced Rs 6-8 cut in CNG and PNG prices, reflecting the cut in input gas prices.
