Gas cost was 10 Rs/SCM in 2010 and now it is 32 Rs/SCM which is 10% CAGR. It is nothing abnormal. This cost increase can be easily passed on to customers & hence company can manage/plan & regulate OPM.
But now, government has decided that APM is going to be abolished in the long term and the initiatives are aggressive in the past 2 months. Hence both gas cost hike and APM abolition are going to affect the fundamentals forever. These are not short term issue like war or any other issues which fades away within a year. If all the cost increase need to be transferred to the customer, then what is the advantage of using CNG for a customer. Definitely, customers will look for alternatives like EV or even petrol.
The government has taken this decision because gas production has declined and imports are increasing. In US, coal to gas transition was due to price competitiveness of gas over other fossil fuels. So the higher cost advantage of gas does not exist in india.
This link https://www.orfonline.org/expert-speak/india-as-a-gas-based-economy-six-years-to-go provides some insights about production vs consumption of CNG.
we cannot have a scenario where production decreases and consumption increases for a long time. This is against economic laws. Then pressure is on government to bear the loss which this government will not.
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