Ahead of polls in Maharashtra and Delhi, central and city gas companies spar over CNG price – Times of India

NEW DELHI: A restriction on the supply of government-controlled natural gas from existing fields has sparked a fierce battle between the oil ministry and city gas network operators seeking to increase their gas supply. CNG prices to at least cover the higher costs of imported fuel used to meet market demand.
The government reduced the existing gas allocation for the city gas sector by 21% in October and 20% in November, due to a natural decline in production from old fields. This is squeezing the margins of companies like Delhi-NCR’s IGL, Mumbai’s MGL and Adani Total gasthat operates in Gujarat and other markets as they make up the shortfall with more expensive gas from new fields or imported LNG (liquefied natural gas).
Technically, the government has no control over CNG or PNG prices. But an upward revision in CNG prices, which will affect auto, taxi, bus and transport companies, is politically untenable for Center at this point in view of the assembly elections in Maharashtra and Delhi served by MGL and IGL, that are promoted by the government. running an oil company.
People with knowledge of the matter told TOI that during a recent interaction, a senior ministry official checkmated operators by asking the executives to prove claims of loss by sharing their cost sharing, which they refused. This prompted the official to hit back and say, “How come IGL is posting a net profit of Rs 1,748 crore on a turnover of nearly Rs 16,000 crore in 2023-24. That’s a margin of 11%. MGL had a profit of around Rs 1,300 crore on a turnover of Rs 7,000 crore. Compare this to Indian Oil Corporation, also a retailer. It posted its best-ever profit of Rs 39,617 crore on a turnover of Rs 8.7 lakh crore, implying a margin of 4.5%. ”
The official said they should be able to absorb the small increase in operating costs from their “heavy” margins. “There cannot be a situation where you insist on getting cheap inputs but refuse to disclose the breakdown of the final product price,” sources quoted another official as saying.