According to Crisil Ratings, city gas distribution (CGD) sales volume is predicted to increase by 18-20 per cent in fiscal year (FY) 2023-24. The surge is owing to demand pull created by price competitiveness of domestic gas against other fuels., including declining gas prices and expansion of distribution infrastructure.
In FY 2022-23, administered pricing mechanism (APM) based gas price increased by 200 per cent to USD 8.57 per metric million British thermal unit (mmBtu) while global gas price showed an increase of 26 per cent at USD 40 per mmBtu on the global front. Owing to this, compressed natural gas (CNG) volume growth showed a decline from 45 per cent in FY 2021-22 to 30 per cent in FY 2022-23. Similarly, the volume of industrial piped natural gas (PNG) declined as industrial liquefied petroleum gas (LPG) and propane became comparatively cheaper.
However, since the government has capped APM prices at USD 6.5 per mmBtu on the recommendation of the Kirit Parikh committee, gas prices have started following downward price adjustment this year. Following this, CNG vehicles sales showed a 35 per cent year-on-year (YoY) growth in FY 2023-24. Moreover, the number of CNG stations showed a 28 per cent YoY growth at the start of FY 2023-24 along with a 20 per cent increase in domestic and industrial connections.
Besides, the CNG and PNG sales are likely to grow by 18-23 per cent while the industrial segment would grow by 10-15 per cent.