IGL, MGL, Adani Total Gas shares rally up to 6% as govt boosts domestic PNG push

Synopsis

City gas distributor stocks rallied after the government approved an incentive scheme to accelerate domestic PNG connections from September 1. Mahanagar Gas, IGL, Adani Total Gas rose as the scheme aims to expand active piped gas connections and promote cleaner, safer and affordable cooking fuel.

Shares of city gas distributors jumped by up to 6% on Wednesday after the government approved an incentive scheme to promote domestic PNG connections, which it called a major initiative to bring clean, safe and affordable piped cooking gas to households across the country.

Mahanagar Gas (MGL) shares jumped nearly 6% to trade at Rs 1,173 apiece on Wednesday morning, while those of Indraprastha Gas (IGL) and Adani Total Gas jumped over 5% each despite an overall muted market sentiment.

New scheme for promotion of domestic PNG connections

The Ministry of Petroleum & Natural Gas on Tuesday announced that the scheme, which will take effect from September 1 onwards, is designed to fast-track the expansion of active PNG connections ensuring that more families can start using piped natural gas in their kitchens at the earliest.

Under the scheme, the eligible city gas distribution (CGD) entities will be allocated an additional 200 SCM of domestically-produced, lower-priced (APM) gas for every incremental billed domestic PNG connection achieved during the period, over and above the threshold Level determined for the respective geographical area.

The new scheme will be implemented over two trachea spanning six months, and the additional gas allocation will substitute the costlier LNG that CGD entities currently procure for their CNG segment, thereby lowering their overall gas-sourcing costs, the government said in its press release.

Also read | Government offers cheaper domestic gas to city gas distributors to boost PNG connections

How will city gas distributors benefit?

The Ministry added that the subsequent cost savings are expected to shorten the payback period for capital expenditure incurred on D-PNG connections from around 10 years to approximately 3 years, which in turn would give CGD entities a strong financial incentive to expand household PNG connectivity more rapidly, bringing the benefits of clean, safe and affordable piped cooking gas to a larger number of Indian households in the months ahead.

At present, there are 1.74 crore domestic PNG connections across the country, according to the government, which said that the new scheme directly incentivises the city gas distribution (CGD) companies to actively convert unbilled connections into working gas connections, and expand the PNG network to new areas.

In its press release, the government highlighted that PNG offers households a safer, cleaner and more convenient alternative to LPG cylinders and traditional cooking fuels. “This Scheme builds on a series of steps the Government has taken over the past few months to accelerate PNG expansion and make the transition to clean cooking fuel easier for households,” it added.

Also read | Mahanagar Gas eyes 1 million new PNG connections in FY27, capex raised

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