Effective October 16, APM gas allocations have been reduced to about 50 per cent.
The government has cut APM allocation to CGDs by 21.2 per cent from 19.68 mmscmd to 15.5 mmscmd from October 16, 2024. This cut is on account of the 20 per cent premium pricing of APM gas from new wells of ONGC and Oil India.
The one-time extent of reduction is a negative surprise.
Alternative supplies would be from a mix of high pressure high temperature (HPHT) gas (with ceiling price $10.16/mmbtu), new well gas from APM fields (12 per cent of oil), Henry Hub-linked LNG ($8-9/mmbtu), or oil indexed/spot LNG ($12-13/mmbtu).
Ballpark estimates are that gas costs will rise ₹3.0-3.2/scm for CGDs which would require ₹5.0-5.5/kg CNG price increase to offset that cut.
Given the weak demand, and lower price arbitrage versus petrol/diesel, and upcoming Assembly elections, price increases will be gradual, hitting margins across H2FY25.
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