Mahanagar, Adani Total, IGL shares tumble over 4% after govt cuts priority gas allocation; here is what companies say

Mahanagar Gas, Indraprastha Gas and Adani Total Gas saw a fresh reduction in cheaper domestic gas allocation under the Administered Price Mechanism (APM), effective from April 16.

Shares of the companies tumbled on Wednesday morning following this development.

The revised domestic gas allocation to the company is approximately 20% less than the previous allocation. However, the company has been allocated an additional ~125% of the reduction in domestic gas volumes as New Well Gas – NWG, which is priced at 12% of the Indian Crude Basket (ICB).

As per the policy guideline dated August 10, 2022, issued by the Ministry of Petroleum and Natural Gas, domestically produced Administrative Price Mechanisms (‘APM’) natural gas is allocated to city gas distribution (‘CGD’) companies for priority segments, specifically Domestic PNG and CNG (Transport).

“The policy states that the supply of domestic gas to CGD entities will be made only up to the quantity available and allocated to GAIL (India) Limited for these segments. In line with this policy, the company was allocated APM natural gas for domestic PNG and CNG (transport) based on APM gas availability,” the firm said.

At 10:50 AM, Mahanagar Gas shares were down 4.43% on the NSE, at ₹1,257.30 apiece.

Further, this lower allocation of APM gas is being replaced with New Well Gas (NWG) as communicated by the Nodal Agency, the firm said. However, the higher-priced NWG and lower APM gas allocation will have an adverse impact on the profitability of the company. Adani Total Gas is exploring all measures to mitigate the impact.