1. Home
  2. Infrastructure Urban
  3. ECONOMY & POLICY
  4. CNG Price Debate: Oil Ministry and City Gas Operators Lock Horns
CNG Price Debate: Oil Ministry and City Gas Operators Lock Horns
ECONOMY & POLICY

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

19 Nov 2024 2 Min Read CW Team
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.

Next Story
Infrastructure Transport
29 Jan 2025

Kolkata Conducts Successful Trial Run on Noapara-Airport Metro Route

Kolkata’s metro network is set for a major expansion as the first trial run on the Noapara-Airport Metro route was successfully conducted on January 25, 2025. Covering a 7.04 km stretch of the Yellow Line, this trial marks a significant step toward the route’s full operational launch, expected by mid-2025. The new metro extension will connect Noapara to Jai Hind Biman Bandar (Kolkata Airport), easing travel for thousands of daily commuters. The trial run, which began at Noapara at 12:09 PM, made stops at Dum Dum Cantonment and Jessore Road before reaching the airport station at 12:31 PM. T..

Read More
Next Story
Infrastructure Transport
29 Jan 2025

BBMP Invites DPR Bids for KR Tunnel and 10 Elevated Corridors

The Bruhat Bengaluru Mahanagara Palike (BBMP) has invited bids for the preparation of a Detailed Project Report (DPR) for a second tunnel road between KR Puram and Nayandahalli, spanning 28 km. This move comes amid ongoing criticism from environmentalists, urban mobility experts, and civic groups against the proposed 18 km twin-tube tunnel road from Hebbal to Silk Board. The new tunnel road is proposed along a route already served by the Purple Line of Bengaluru Metro (Whitefield-Challaghatta via KR Puram and Nayandahalli). Additionally, BBMP has sought DPR bids for multiple elevated corr..

Read More
Next Story
Infrastructure Urban
29 Jan 2025

Tyre Industry Seeks Ban on Scrap Tyre Imports Amid Surge

The Automotive Tyre Manufacturers Association (ATMA) has urged the government to impose an immediate ban on waste tyre imports, citing a more than fivefold increase since FY21 and growing environmental concerns. According to Ministry of Commerce data, imports of waste and scrap tyres have surged from 264,000 metric tonnes in FY21 to 1.398 million metric tonnes in FY24. In its pre-budget submission, ATMA Chairman Arnab Banerjee highlighted that the rising imports contradict India's Extended Producers Responsibility (EPR) Regulation on Waste Tyres, implemented in July 2022. The regulation i..

Read More

Opinion Poll

Question : Which technological advancement do you believe will most transform the real estate industry in the coming years?

Latest updates

Kolkata Conducts Successful Trial Run on Noapara-Airport Metro Route
RAILWAYS & METRO RAIL
29 Jan 2025

Kolkata Conducts Successful Trial Run on Noapara-Airport Metro Route

BBMP Invites DPR Bids for KR Tunnel and 10 Elevated Corridors
ROADS & HIGHWAYS
29 Jan 2025

BBMP Invites DPR Bids for KR Tunnel and 10 Elevated Corridors

Tyre Industry Seeks Ban on Scrap Tyre Imports Amid Surge
ECONOMY & POLICY
29 Jan 2025

Tyre Industry Seeks Ban on Scrap Tyre Imports Amid Surge

Vaibhav Urja Invites EoI for Solar Module Supply for 6 MW Projects
POWER & RENEWABLE ENERGY
29 Jan 2025

Vaibhav Urja Invites EoI for Solar Module Supply for 6 MW Projects

Birla Real Estate and Mitsubishi Partner for Bengaluru Housing Project
Real Estate
29 Jan 2025

Birla Real Estate and Mitsubishi Partner for Bengaluru Housing Project

Telangana Targets 20 GW Renewable Energy Expansion by 2030
POWER & RENEWABLE ENERGY
29 Jan 2025

Telangana Targets 20 GW Renewable Energy Expansion by 2030

MP Brijesh Chowta Lays Foundation for Kadaba Road Project
ROADS & HIGHWAYS
29 Jan 2025

MP Brijesh Chowta Lays Foundation for Kadaba Road Project

Solar Scheme Enables 2,448 MMR Consumers to Reach Energy Independence
POWER & RENEWABLE ENERGY
29 Jan 2025

Solar Scheme Enables 2,448 MMR Consumers to Reach Energy Independence

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000