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As per media reports, the Kirit Parikh committee is likely to suggest a ceiling price of US$6.5-7/mmbtu for domestic gas and increase this ceiling by US$ 0.5/mmbtu every year and would later be removed in a phased manner. By the end of the 4th year gas prices may be made market linked. The report also recommends bringing natural gas under GST. The final meeting of the committee is to be held on 28th November.
CNG and domestic PNG volumes account for nearly 80% and 87% of IGL and MGL's total volume. The priority sector accounts for 36% of Gujarat Gas' volumes. Hence, IGL and MGL would be benefited to a greater extent than Gujarat Gas. If prices are lowered, their sourcing costs may come down by ~US$2/mmbtu improving their margins to an extent and lowering CNG and domestic PNG prices.
Positive