+
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
Real Estate

Peninsula Land launches 19 luxury villas in Pune

Pune’s residential landscape is witnessing a shift as premium homebuyers increasingly seek larger spaces, privacy and independent living options beyond high-rise apartments. Addressing this demand, Peninsula Land Limited, part of the Ashok Piramal Group, has launched AshokVillas, an exclusive collection of 19 premium furnished villas in Gahunje, Pune.The development combines the independence of a standalone home with the convenience and security of a managed residential community. Designed around low-density horizontal living, AshokVillas offers residents private spaces while providing acces..

Next Story
Infrastructure Urban

MyBranch Expands South India Network with 16 Workspace Centres

MyBranch has expanded its South India presence with a 50,000 sq ft flexible workspace network comprising 16 centres across 14 cities in Andhra Pradesh, Karnataka, Tamil Nadu and Telangana.The expansion reflects growing demand for flexible office infrastructure as businesses establish regional teams, satellite offices and operations beyond traditional metropolitan markets. MyBranch’s network spans Bengaluru, Coimbatore, Guntur, Hanamkonda, Hubballi, Hyderabad, Madurai, Mangaluru, Rajahmundry, Salem, Tirupati, Vellore, Vijayawada and Visakhapatnam, with a large office space in Chennai also und..

Next Story
Building Material

Walplast Launches Moisture-Resistant Gypsum Plaster Solutions

Walplast Products Pvt. Ltd. has expanded its HomeSure GypEx portfolio with the launch of GypEx MoistShield and GypEx Gold, two gypsum plaster solutions designed to address moisture-prone applications and improve plastering efficiency.The new products have been developed in response to the growing demand for faster construction processes, improved material performance and consistent surface quality. The solutions aim to simplify interior plastering while addressing specific application requirements across construction environments.“Through HomeSure GypEx MoistShield and GypEx Gold, we are exp..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code