The Kirit Parikh committee submitted a report in 2022, suggesting absolute freedom on gas pricing.
The suggestion of the panel was that India should have entirely free and market-intent pricing of natural gas drawn from legacy fields, which is responsible for more than 70% of the total natural gas made in India.
After that, the government issued various vital recommendations to the committee, and big oil and gas firms have initiated to cut their natural gas like CNG and PNG prices.
CNG, PNG Price Cut
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The newest to adapt will be Gail, after Indraprastha Gas, Mahanagar Gas, and Adani Total Gas. The gas price alteration will possibly improve cash flow in the firms.
GAIL has cut its CNG as well as PNG prices by up to Rs 7 in several states. At the same time, Mahanagar Gas has cut the prices by Rs 8 and Domestic PNG by Rs 5/ SCM in and around Mumbai. At the same time, Indraprastha Gas cut the prices by Rs 6 in Delhi.
Following the companies, Adani Total Gas has cut its CNG price by 8.13/kg and PNG by 5.06/scm.
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The initiative is taken after the Government of India issued various vital suggestions made by the Kirit Parikh Committee in accordance with the pricing of natural gas generated from APM fields.
These are legacy fields and are majorly held by PSUs such as ONGC. The change in PNG has come into effect from April 8th. Most of the price alteration in CNG, as well as PNG, has come into effect from April 9th.
5 Stocks To Buy
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- ICICI Direct has given the recommendation to buy these five particular stocks in the oil and gas basket after the newest price change in the industry. Have a look on:
| ONGC | Buy for TP of Rs180 |
| Reliance Industries | Buy for TP of Rs3,050 |
| Indraprastha Gas | Buy for TP of Rs463 |
| Mahanagar Gas | Buy for TP of Rs980 |
| Gujrat Gas | Buy for TP of Rs465 |
- ONGC– The drop in APM prices will lessen ONGC’s net realization by US$2/mmbtu (Rs 6/scm) but will still carry on to be above historical averages.
- Reliance Industries– The drop in HPHT prices on the 1st of April will lessen RIL’s net realization by $0.35/mmbtu (Rs1/scm) but will still carry on to be above historical averages.
Also, according to the sources of media, as of now, there has been no clarity on providing marketing freedom to its gas pricing which was also a prime recommendation made by KPC.
- Indraprastha Gas– The alteration in the price of gas will lessen IGL’s gas sourcing value by Rs6/scm.
Undertaking the firm passes on this profit to the clients, the brokerage anticipates their volumes to grow going further.
- Mahanagar Gas– The new costing will minimize the gas sourcing price by Rs 6/scm. The firm has so far publicized an Rs2.5/kg reduction in the CNG price.
Presuming the firm carries on to pass this profit to the clients, the brokerage anticipates their volumes to grow going further.
- Gujrat Gas– The firm is also likely to profit from this price alteration to a certain extent, but the firm is a prime beneficiary of the drop in LNG values and surge in crude prices, the brokerage anticipates its industrial volumes to surge going further.