Center reduces LPG allocation, directs excess supply to city retailers IGL and Adani Total Gas

The Indian government has reallocated natural gas from LPG production to city gas retailers, such as Indraprastha Gas Ltd and Adani-Total Gas Ltd, to meet their requirement for CNG/piped cooking gas supplies. This move aims to resolve the recent price hike of CNG by Rs 2-3 per kg, which made it less attractive compared to alternate fuels like diesel. The government has cut supplies of low-priced natural gas from old fields to city gas retailers by 40% since October, leading to price hikes. To address this, the Ministry of Petroleum and Natural Gas has ordered a cut in gas supplied to state-owned GAIL and ONGC for LPG production and diverted those volumes to city gas entities. The diverted gas will be used to meet the demand for CNG/piped cooking gas in the January-March quarter. The government will likely bear the cost of higher production, as it subsidizes domestic cooking gas LPG. The allocation change is expected to take a couple of weeks to implement, with city gas retailers likely to receive increased supplies from mid-January.