The recent government decision to prioritize gas supply for household use may lead to significant impacts on industrial gas consumers, including IGL.
Gas Supply Prioritization
The government has decided to prioritize gas supply for household PNG and CNG, which may lead to a curtailment of supply for industrial users. This decision is expected to have varying impacts on companies such as Indraprastha Gas Limited (IGL), Gujarat Gas Limited, and Mahanagar Gas Limited.
Impact on Companies
Gujarat Gas has approximately 49% of its total volume supplied to industrial and commercial consumers, making it particularly vulnerable to the supply changes. Mahanagar Gas Limited (MGL) and Indraprastha Gas Limited (IGL) have 16% and 13% of their total gas distribution allocated to industrial and commercial segments, respectively.
Analysts from Nomura estimate that a 20% curtailment in gas supply to these segments could impact MGL and IGL by around 3% each on their volumes. In contrast, Gujarat Gas is likely to face a more substantial impact, estimated at around 10% on its volumes due to its higher exposure to the industrial and commercial segment.
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 around 10 lakh LPG connections in Noida and 12 lakh in Ghaziabad, with approximately 8,000 and 15,000 connections classified as commercial, respectively.
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, which has so far maintained its operations.
Government Measures
Authorities have issued directions to ensure that domestic consumers do not face inconvenience in LPG supply. However, the prioritization of household needs over industrial requirements raises concerns about the future availability of gas for commercial use.
Looking Ahead
As the situation develops, observers will be closely monitoring the impacts on gas supply and the potential long-term effects on industrial consumers. Details remain unconfirmed regarding the full extent of the curtailment’s impact on specific companies and sectors.
