Gas Stocks Plunge as Allocation is Reduced for City Distributors from April 16

Starting April 16, 2025, major city gas distribution companies in India will operate with reduced volumes of APM (Administered Price Mechanism) domestic gas. The revised allocations have been communicated by GAIL (India) Ltd, the nodal agency for gas supply. The reductions affect distributors supplying piped natural gas (PNG) and compressed natural gas (CNG) in urban areas. 

Companies have reported a shift from APM gas to costlier alternatives like New Well Gas (NWG), with an expected impact on operational costs.

Mahanagar Gas Limited (MGL)

Mahanagar Gas Ltd has reported an 18% reduction in its APM gas allocation, effective April 16. This allocation is typically used to meet demand in the domestic PNG and transport CNG segments. The reduction aligns with existing guidelines issued by the Ministry of Petroleum and Natural Gas on August 10, 2022. To make up for the shortfall, the company has been allocated New Well/Well Intervention Gas (NWG), which is priced higher than APM gas. The company has stated that it is assessing options to address the cost impact​.

Indraprastha Gas Limited (IGL)

Indraprastha Gas Ltd will see a 20% cut in its domestic gas supply starting April 16. The company has received an alternative allocation of NWG, amounting to roughly 125% of the reduction. While the existing APM gas was priced at $6.75 per MMBtu, the replacement NWG is linked to 12% of the Indian Crude Basket pricing. This change is expected to influence the company’s gas sourcing costs​.

Adani Total Gas Limited (ATGL)

Adani Total Gas Ltd has been notified of a 15% reduction in its APM gas allocation. This change, effective April 16, will be offset by a corresponding volume of New Well Gas. The company has acknowledged the cost differential and is reviewing ways to manage the financial impact​.

As of 10:37 AM on April 16, 2025, Shares of MGL, IGL and Adani Total Gas were down by 4.84%, 2.72% and 0.70%, respectively.

Conclusion

All three companies – MGL, IGL, and ATGL have confirmed lower APM allocations and corresponding substitutions with higher-priced gas. Revised sourcing is expected to influence cost structures in the near term.

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