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.

Next Story
Infrastructure Urban

Arya Omnitalk Powers India’s Toll Revolution with AI-Driven Solutions

Arya Omnitalk, a leader in intelligent transportation systems, is revolutionising toll collection across India’s national highways with its advanced AI-powered Toll Management Solutions. Designed for rugged remote toll locations, the company’s cutting-edge technology ensures seamless, reliable, and secure tolling—especially during high-capacity operations exceeding 200%. By integrating real-time analytics, cyber protection, and FASTag-based cashless tolling, Arya Omnitalk’s systems are significantly reducing congestion, improving transparency, and enhancing revenue assurance. Its full..

Next Story
Infrastructure Urban

Over 800 Join Anant Raj Runathon to Mark Earth Day

Over 800 participants came together at Anant Raj Estate, Sector 63A, Gurugram, for the Anant Raj Runathon 2025—a vibrant celebration of Earth Day through fitness, community bonding, and sustainability. Curated by renowned running coach Ravinder, the event featured four categories: 10-mile and 5-mile timed runs, a 5-mile walkathon, and a 1-mile kids’ run. Runners of all ages took to the green, scenic roads of the area—some chasing personal bests, others running for a cause. The Runathon was designed to promote healthy living while raising awareness about sustainable practices. Participa..

Next Story
Infrastructure Urban

PETRONAS Lubricants, Quaker Houghton Ink Strategic Deal

In a significant step towards strengthening industrial operations in India and Malaysia, PETRONAS Lubricants India Pvt. Ltd (PLIPL) and Quaker Houghton have announced a strategic partnership aimed at delivering high-performance industrial fluid solutions to key manufacturing sectors, including steel production. The collaboration combines the strengths of both companies—leveraging PETRONAS Lubricants India’s maintenance lubricant technologies and Quaker Houghton’s deep expertise in metalworking fluids. Starting from the second quarter of 2025, Quaker Houghton will begin offering PETRONAS..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?