IGL, MGL and Gujarat Gas shares fall as LPG price revision awaits Cabinet decision

Shares of city gas distributors have fallen after domestic gas prices were left unchanged pending a Cabinet decision.

India will provisionally keep the price of locally produced gas from old fields at $8.57 per million metric British thermal units (mmBtu), the government said on Friday, while it considers a potential change to the pricing formula. The ceiling has been reduced marginally to $12.1 from $12.5 per mmBtu.

At 10:29am, shares of Indraprastha Gas Ltd (IGL), Mahanagar Gas Ltd (MGL) and Gujarat Gas were trading 1-5 percent lower.

Catch up on all LIVE stock market updates here

The domestic gas prices have been kept on hold as the government is still considering the recommendations of Kirit Parikh committee on fair pricing of natural gas. It is also expected that once accepted, the recommendations will become applicable retrospectively from 1st April 2023, as per a news report.

Kirit Parekh told CNBC-TV18 in an interaction that he has heard that the Cabinet is considering the proposed recommendations. He added that he is personally against doing anything retrospectively.

He is not sure about the Cabinet approval but said that the recommendations are being considered.

“If the Kirit Parikh Panel recommendations are implemented, there will be some reduction in the input gas cost, there will be a reduction of $1.5/mmBtu,” Pawan Kumar, Director-Commercial at Indraprastha Gas Limited (IGL), had told CNBC-TV18 last month.

“While the delay was unexpected, we expect new price notification based on KP committe reco (incl APM price cap at $6.5), to be announced in the near future,” Jefferies said in a note to clients.