According to CRISIL, India’s city gas consumption volume is expected to reduce to 8 to 10 per cent in 2022-23 as compared to an earlier projection of 20 to 25 per cent owing to the 40 per cent rise in natural gas prices.  The demand for industrial piped natural gas (PNG) is likely to reduce by 10 to 12 per cent,as price-sensitive industrial customers will switch to alternate fuels such as propane and gasoline oil. Meanwhile demand for residential PNG, is likely to rise by 2 to 5 per cent as employees return to workplace with the Covid-19 pandemic subsiding. However, the demand for compressed natural gas (CNG) will rise to 25-30 per cent on account of the expanding network of CNG stations.

Russia-Ukraine war, disruption in global supplies and its impact on cost of regasified liquefied natural gas sourced from the international market has increased the cost of gas sourcing. The has led the city gas distributors to increase the price of CNG and PNG.

According to the industry, city gas players may now face margin headwinds as they balance between protecting margins and driving volume growth. The margins are expected to fall from Rs 8.82 per scm to Rs 8.0 per scm.