IGL shares falls after reduction in domestic gas allocation
Till date, IGL has received gas at a government-fixed price of $6.75/MMBtu. The reduction in this cheaper domestic gas allocation is likely to increase input costs for the company.
New Delhi: Shares of Indraprastha Gas Ltd (IGL) plunged over 2.15% to Rs 175.05 as the company disclosed a reduction in its domestic gas allocation, in order to impact its profitability.
As per the filing, the company has received a communication from GAIL (India)the nodal agency for domestic gas distribution stating that its allocation of domestic natural gas for the supply of piped natural gas (PNG) to households and compressed natural gas (CNG) for vehicles has been reduced by approximately 20%, effective 16 April 2025.
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Till date, IGL has received gas at a government-fixed price of $6.75/MMBtu. The reduction in this cheaper domestic gas allocation is likely to increase input costs for the company.
Furthermore, the IGL has been allocated additional volumes of New Well Gas (NWG), equivalent to roughly 125% of the reduction in domestic gas. However, this gas comes at a steeper price, 12% of the Indian Crude Basket (ICB).
The gas distribution company has announced that this shift in allocation and pricing structure is expected to affect its profitability.
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