Shares of Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL) rose on January 3 following the government's directive to GAIL and ONGC to divert 0.6 mmscmd of natural gas to city gas distribution (CGD) companies. This move aims to reduce CGD firms' reliance on high-cost spot market gas by allocating new healthy and oil-linked gas based on proportional market volume.
At 10:30 am, IGL's shares traded 2.5% higher at ₹437, and MGL gained 1.8%, reaching ₹1,319.5. Notably, IGL received the largest allocation due to its significant market share.
Government's Strategy to Support CGD Players
The allocation follows challenges from recent cuts to the Administered Price Mechanism (APM) gas supply. In November, the government reduced APM allocations to CGD firms by 20%, forcing them to rely on costlier alternatives like spot LNG or New Well Gas. This latest measure aims to stabilise input costs for CGD companies.
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