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energy | IST

GAIL says complete pass-through of gas price hikes not possible; LPG rate to go up

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AK Tiwari, director of finance at GAIL, on Friday, said that liquefied petroleum gas prices will see an increase due to higher domestic gas prices.

AK Tiwari, director of finance at GAIL, on Friday, said that liquefied petroleum gas prices will see an increase due to higher domestic gas prices.
The government on Thursday, September 30, announced a 62 percent hike in the price of natural gas, which is used to produce electricity and is turned into CNG to use as fuel in automobiles and cooking gas for household kitchens.
This is the first hike since April 2019 when the price was at $1.79 per Metric Million British Thermal Unit (mmBtu). The revision, which is in line with the expectation of a 60 to 70 percent hike, comes on the back of a surge in global gas prices.
The hike comes as a positive for gas producers like Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), however, it may prove to be negative for gas distribution companies like IGL and MGL and also power companies that use gas as an input as the revision could mean higher input costs.
“The gas prices determined is a reflection of global higher prices. Therefore, the impact of higher prices on the turnover though LPG prices, unit prices will increase, but LPG prices, as well as petrochemical prices, are on a high trend, so we are going to compensate and our topline, as well as the bottomline, will be up as we presume,” Tiwari said, in an interview to CNBC-TV18.
On price hike, he said, “The price in fertiliser, as well as piped natural gas (PNG) and compressed natural gas (CNG), will be marginally higher and it cannot be passed-through altogether.”
He further mentioned that with more hikes expected, it won’t be completely possible to pass it on.
For the entire interview, watch the video