CNG Price Debate: Oil Ministry and City Gas Operators Lock Horns
ECONOMY & POLICY

CNG Price Debate: Oil Ministry and City Gas Operators Lock Horns

A reduction in government-controlled natural gas supply from legacy fields has escalated tensions between the oil ministry and city gas operators, as the latter push to raise compressed natural gas (CNG) prices to offset rising costs of imported fuel.

The government slashed legacy gas allocations to the city gas sector by 21% in October and 20% in November, citing declining production from older fields. This shortfall is forcing companies like Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL), and Adani Total Gas to rely on costlier alternatives such as gas from new fields or imported liquefied natural gas (LNG), squeezing their profit margins.

Despite not directly controlling CNG or PNG prices, the Centre faces mounting pressure to prevent a price hike, particularly in politically sensitive regions like Delhi and Maharashtra, ahead of impending elections. However, oil ministry officials have questioned the operators’ claims of financial strain, citing robust profit margins.

In 2023-24, IGL reported a net profit of ?1.748 billion (?1,748 crore) on a revenue of nearly ?160 billion (?16,000 crore), achieving an 11% margin. Similarly, MGL posted a profit of ?130 billion (?1,300 crore) on a revenue of ?70 billion (?7,000 crore), compared to IndianOil Corporation’s 4.5% margin on revenues of ?8.7 trillion (?8.7 lakh crore). Officials argue these figures suggest operators can absorb rising costs without passing them onto consumers.

A senior ministry official challenged operators to disclose cost breakdowns to justify their demands for price hikes, a request the companies reportedly declined. "There cannot be a situation where operators demand low-cost inputs but avoid transparency in pricing," the official remarked.

The standoff highlights the balancing act between economic realities and political sensitivities in India’s energy sector.

A reduction in government-controlled natural gas supply from legacy fields has escalated tensions between the oil ministry and city gas operators, as the latter push to raise compressed natural gas (CNG) prices to offset rising costs of imported fuel. The government slashed legacy gas allocations to the city gas sector by 21% in October and 20% in November, citing declining production from older fields. This shortfall is forcing companies like Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL), and Adani Total Gas to rely on costlier alternatives such as gas from new fields or imported liquefied natural gas (LNG), squeezing their profit margins. Despite not directly controlling CNG or PNG prices, the Centre faces mounting pressure to prevent a price hike, particularly in politically sensitive regions like Delhi and Maharashtra, ahead of impending elections. However, oil ministry officials have questioned the operators’ claims of financial strain, citing robust profit margins. In 2023-24, IGL reported a net profit of ?1.748 billion (?1,748 crore) on a revenue of nearly ?160 billion (?16,000 crore), achieving an 11% margin. Similarly, MGL posted a profit of ?130 billion (?1,300 crore) on a revenue of ?70 billion (?7,000 crore), compared to IndianOil Corporation’s 4.5% margin on revenues of ?8.7 trillion (?8.7 lakh crore). Officials argue these figures suggest operators can absorb rising costs without passing them onto consumers. A senior ministry official challenged operators to disclose cost breakdowns to justify their demands for price hikes, a request the companies reportedly declined. There cannot be a situation where operators demand low-cost inputs but avoid transparency in pricing, the official remarked. The standoff highlights the balancing act between economic realities and political sensitivities in India’s energy sector.

Related Stories

Gold Stories

Next Story
Resources

Schindler named among Forbes’ World’s Best Employers 2026

Schindler has been named among Forbes’ World’s Best Employers 2026, a global ranking recognising companies for their workplace environments.Compiled by Forbes in partnership with Statista, the ranking is based on independent employee feedback, including whether employees would recommend their organisation to friends and family.The company said the recognition reflected its focus on creating a workplace where employees can develop their expertise and build careers. ..

Next Story
Infrastructure Urban

India needs an export-execution mindset: Vishesh Jain

Interview with Vishesh Jain, Founder & CEO, EximpleWhat gaps in India’s global trade ecosystem led you to build Eximple, and what problem did you see businesses struggling with most?Eximple came out of a problem that all three founders had seen from different choke points in the trade ecosystem. India has millions of MSMEs and manufacturers, and many of them can make products that are genuinely competitive on quality. Yet only a small fraction is able to build meaningful international businesses. In our experience, the gap is usually not manufacturing capability; it is the ability to exe..

Next Story
Building Material

Nuvoco reports 13.5% revenue growth in Q2 FY27

Nuvoco Vistas Corp. Ltd. reported consolidated revenue of Rs 27.9 billion for Q2 FY27, up 13.5% year on year. Cement sales volume rose 9% to 4.7 million tonnes (MMT), while EBITDA increased 11% to Rs 4.11 billion.The company said it began its cement operations in 2014 with a 2.3 MMT per annum (MMTPA) operation at Nimbol. It now aims to reach 35 MMTPA of cement capacity by FY28, nearly 15 times its initial capacity. Its portfolio spans cement, ready-mix concrete and modern building materials.On sustainability and cost efficiency, Nuvoco partnered with CleanMax for a 46.4 MW wind-solar hybrid re..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code