Igl: Impact of Gas Supply Curtailment on and Other Companies
Gas Supply Curtailment Impact
The government has prioritized gas supply for household PNG and CNG, which may lead to a significant curtailment for industrial users. Analysts from Nomura estimate that a 20% reduction in gas supply to industrial and commercial segments could impact both Mahanagar Gas Limited (MGL) and Indraprastha Gas Limited (IGL) by approximately 3% on their volumes.
Gujarat Gas Limited, which supplies around 49% of its total volume to industrial and commercial consumers, is expected to face a much larger impact, with estimates suggesting a 10% reduction in volumes due to its higher exposure to these segments.
Mahanagar Gas Limited has around 16% of its total gas distribution allocated to industrial and commercial segments, while Indraprastha Gas Limited has about 13%. The implications of these changes could reshape the operational landscape for these companies.
In Noida, the minimum waiting period for booking a domestic LPG cylinder refill has increased to 25 days, up from 21 days. This change affects the approximately 10 lakh LPG connections in the area, with around 8,000 classified as commercial. Ghaziabad, with 12 lakh LPG connections, also faces similar challenges, with around 15,000 connections designated for commercial use.
Despite these challenges, the supply of PNG and CNG in the region has continued without interruption. The gas supply network in western Uttar Pradesh is connected to the Hazira-Vijaipur-Jagdishpur pipeline operated by GAIL (India) Limited, ensuring some level of stability in supply.
Authorities have issued directions to ensure that domestic consumers do not face inconvenience in LPG supply, highlighting the government’s commitment to maintaining essential services amidst the curtailment of industrial gas supplies.
The decision to prioritize gas supply for essential segments may lead to a scarcity of gas for industrial and commercial use, impacting operations and profitability for companies like IGL and MGL.
Details remain unconfirmed regarding the long-term effects of these supply changes, and observers are closely monitoring the situation as it develops.
