Mahanagar Gas Ltd. has increased the price of Compressed Natural Gas by Rs 2 per kilogram to Rs 77 per kilogram, effective Nov. 22. The hike, while aimed at addressing rising costs, is unlikely to fully insulate the company from the margin pressures anticipated due to reduced domestic gas allocations.
On Nov. 16, city gas companies including MGL, Indraprastha Gas Ltd., and Adani Total Gas Ltd. faced supply cuts in their domestic gas allocations from GAIL (India) Ltd., which ranged from 13% to 20%.
Domestic gas is allocated at a fixed price of $6.5 per million metric British thermal units, and its reduced supply impacts profitability as these companies rely on it for their CNG sales.
This is the second reduction in domestic gas allocation this year, following a similar cut announced by Oil and Natural Gas Corp. in October.
Shares of the company were trading 2.5% higher at Rs 1,154 apiece as of 9:24 a.m., compared to an advance of 0.65% in the benchmark NSE Nifty 50.
(This is a developing story.)
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