IGL says household gas prices unlikely to rise much despite supply pressure; awaits tax relief measures

Indraprastha Gas Ltd Managing Director K K Chatiwal on Thursday, April 9, indicated that any potential increase in domestic piped natural gas (PNG) prices is likely to be marginal, even as supply-side pressures continue to impact compressed natural gas (CNG) costs.

Speaking to CNBC-TV18, Chatiwal said the company is not currently considering a price hike for household PNG, but even if implemented, the impact on consumers would be limited.

“A typical household consumes about 12 standard cubic metres (SCM) of gas per month. Even with a ₹1–₹1.5 increase per SCM, the monthly impact would be capped at around ₹20,” he noted, underscoring that any revision would be “very minimal.”

However, the situation is more challenging on the CNG front due to supply constraints. Around 50% of CNG is sourced from regasified liquefied natural gas (RLNG), making it vulnerable to fluctuations in spot prices and disruptions such as force majeure events. The remaining supply comes from administered price mechanism (APM) gas, including output from new wells and high-pressure, high-temperature (HPHT) fields—segments where prices have also firmed up.

Chatiwal said the company is currently in a “wait-and-watch” mode, anticipating that easing crude prices could help stabilise the situation. “We are not looking at a steep hike. With crude softening, we believe the situation may normalise soon, and the need for a price increase may not arise,” he added.

The company is also closely tracking potential policy interventions by the government, particularly on the taxation front. According to Chatiwal, discussions are underway on possible tweaks to excise and customs duties on natural gas. At present, central excise duty stands at around 14%, while customs duty on imported LNG is 2.75%. Value-added tax (VAT) varies significantly across states, ranging from 0% to 16%.

He added that there is consideration of shifting towards an ad valorem tax structure, where duties are linked to prices rather than fixed rates—potentially softening the burden when prices rise. The Petroleum and Natural Gas Regulatory Board (PNGRB) has also urged state governments to rationalise VAT on natural gas to support wider adoption.

Meanwhile, the government has pushed city gas distribution (CGD) companies to accelerate the rollout of PNG connections. The PNGRB has asked firms to scale up installations to 30,000 new connections per day by June, significantly higher than the current pace of about 10,000 per day.

IGL said it is working towards meeting the revised target, although it noted that many households with PNG connections continue to retain LPG connections, indicating partial rather than complete fuel switching.

Also Read: City gas distributors asked to speed up PNG rollout; IGL sees stable prices