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Govt cut cheaper APM gas supply to CNG retailers IGL, MGL, Adani Total Gas
The government has cut the supply of lower-cost APM gas to city gas distributors such as Indraprastha Gas Ltd, Mahanagar Gas Ltd, and Adani Total Gas Ltd, by up to 20 per cent, replacing the shortfall with more expensive fuel.
GAIL (India) Ltd, the state-owned nodal agency for gas supply, has intimated about a cut in supply of gas from legacy fields, called Administered Price Mechanism (APM) gas, the three city retailers said in separate stock exchange filings.
The production of APM gas, which is currently priced at $6.75 per million British thermal unit, is declining at the rate of 9-10 per cent annually as recovery from old and ageing fields falls.
Oil and Natural Gas Corporation (ONGC) is investing in drilling more wells to maintain the output, but that additional cost is reflected in a higher price of the gas thus produced. Such gas is called new well gas and is priced at about $8 per mmBtu.
In the last one year, APM gas supplies to city gas retailers have been cut by almost 50 per cent.
With the latest cut, the APM gas now meets about 34 per cent of the total city gas requirement, down from 51 per cent previously.
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