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Mahanagar Gas price hike: City gas distribution companies have no option, says IIFL

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Mahanagar Gas price hike: City gas distribution companies have no option, says IIFL

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Mahanagar Gas has hiked prices once again and with this latest hike, CNG prices are up 11.5 per kg and PNG by 7.60 per SCM in just the last two months. Harshvardhan Dole, Vice President, Institutional Equities at IIFL said given that LNG is now almost $35-40 per MMBtu, there is no option for these companies but to take such incremental hikes.

The Mahanagar Gas Ltd (MGL) hiked the prices of CNG and PNG with effect from Friday (Dec 17). The basic price of CNG is increased by Rs 2/kg and domestic PNG by Rs 1.50/SCM for the Mumbai Metropolitan Region (MMR).

Accordingly, the revised all-inclusive prices of CNG that fuels vehicles will go up from Rs 61.50/kg to Rs 63.50/kg, and the home use PNG shall shoot up from Rs 36.50/SCM to Rs 38/SCM, said an MGL spokesperson.
Justifying the hike, the MGL said in order to meet the shortfall in domestic gas allocation, the company is sourcing additional market-priced natural gas (imported RLNG) to cater to the increasing demands for both CNG and PNG.
Speaking to CNBC-TV18 Harshvardhan Dole, VP-Institutional Equities at IIFL said, “Price hikes have been taken by city gas companies all across. Firstly, the supply of APM gas has been down relative to the increase in demand. Secondly, since there has been a shortfall in the APM gas supplies, these companies are forced to buy LNG at a significantly higher price.”
He added, “Given the fact that LNG is now almost $35-40 per MMBtu, there is no option for these companies but to take such incremental hikes.”
In terms of the pecking order, they continue to like the city gas distribution companies over some of the PSUs, and they like the space, he added.
For full interview, watch accompanying video...
 
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