Overview

• The Ministry of Petroleum and Natural Gas has revised the Domestic Gas Allocation Policy to include New Well Gas (NWG) and implement two-quarter advance allocations starting Q1FY26.
• Declining APM gas production has led to a 20% reduction in supplies for city gas distributors, replaced by higher-priced NWG, nearly doubling NWG volumes to 6.8 mmscmd.
• APM gas is capped at $6.75/MMBtu, while NWG costs around $8/MMBtu, increasing input costs for distributors like IGL, MGL, and Adani Total Gas.
• City gas companies warn of margin pressures and potential CNG price hikes, despite the government maintaining allocation ratios near 55% of projected demand.
• The pro-rata allocation system for NWG replaces auctions, aiming to enhance supply predictability and affordability for CNG and PNG consumers.