Low prices of CNG, piped natural gas may keep margins robust; but watch for this risk


Low prices of CNG, piped natural gas may keep margins robust; but watch for this risk

With softer gas prices propping up CNG and piped cooking gas consumption, city gas distribution (CGD) entities will continue to see robust margins but any adverse change in the policy of gas allocation is a key risk for the industry’s profitability, ratings agency ICRA said.

The volume consumption of compressed natural gas (CNG) by automobiles and piped natural gas (PNG) in domestic kitchens has been witnessing an increasing trend, supported by softer gas prices in the last 2-3 years, ICRA said in a statement on a report it has prepared on the domestic CGD sector.

“Going forward, demand growth favours CGD entities over the next decade and their margins are expected to remain healthy,” ICRA Senior Vice President K Ravichandran said. Read More

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