The government's move is expected to force city gas distribution companies, which supply CNG for vehicles, to increase their reliance on more expensive imported gas. This will likely put pressure on their profitability and potentially lead to higher CNG prices for consumers.
Mahanagar Gas, one of the affected companies, stated that the reduced allocation will have a negative impact on its profitability. To mitigate the shortfall, the company is actively exploring alternative gas sourcing options, including domestically produced High Pressure High Temperature (HPHT) gas, New Well/Well Intervention gas (NWG) from ONGC, and benchmark-linked long-term gas contracts.
Indraprastha Gas also announced that it has faced a significant reduction in its domestic gas allocation, which could adversely affect its profitability. The company is currently in discussions with key stakeholders to minimize the impact of this cut.