1 week ago
Additional APM Gas Incentive Favors CGD Companies, Analyst Says
The government is giving city-gas companies extra cheaper gas when they add more paying households.
Each new paying household can qualify for 200 standard cubic metres of additional APM gas.
The program starts on 1 September 2026.
Companies must add more households than their recent average, with the threshold increased by 10 percent.
Mahanagar Gas uses the least gas per household among the companies discussed.
That could leave it with the most extra gas to replace more expensive gas.
IGL added about 28,800 households each month during April-June 2026.
Nomura believes the incentive could shorten the time needed to recover investment in PNG infrastructure.
The government’s new incentive provides 200 standard cubic metres of additional APM gas for each additional paying household.
The scheme begins on 1 September 2026, with the household-addition threshold based on April-June 2026 monthly additions plus 10%.
Nomura said Mahanagar Gas could receive the largest surplus APM allocation because of its low per-household consumption.
As of March 2026, 10.7 million of 16.9 million connected households were billed customers, leaving scope for customer conversion.
Nomura set targets of Rs 1,465 for Mahanagar Gas, Rs 155 for IGL and Rs 379 for Gujarat Energy.
- Who
- City-gas distribution companies, particularly Mahanagar Gas, IGL and Gujarat Energy, as assessed by Nomura.
- What
- A government incentive will provide additional APM gas for each additional paying household added by qualifying companies.
- Where
- Across the city-gas distribution network covered by Petroleum and Natural Gas Regulatory Board data.
- When
- The scheme starts on 1 September 2026; the reference period for household additions is April-June 2026.
- Why
- To encourage household additions and improve access to lower-cost APM gas, potentially reducing reliance on higher-cost non-APM gas.
Key facts
- Additional allocation
- 200 standard cubic metres of APM gas per additional paying household.
- Scheme start
- 1 September 2026.
- Addition threshold
- Average monthly household additions during April-June 2026, increased by 10 percent.
- Connected versus billed households
- Of 16.9 million connected households as of March 2026, 10.7 million, or 63 percent, were billed customers.
- PNG capex payback
- The government said the incentive could reduce the payback period for PNG-related capital expenditure from 10 years to 3 years.
- Household consumption
- Nomura estimated annual consumption at 131 standard cubic metres per household for Gujarat Energy and 108 standard cubic metres for Mahanagar Gas.
- Nomura price targets
- Rs 1,465 for Mahanagar Gas, Rs 155 for IGL and Rs 379 for Gujarat Energy.
Quotes
Nomura Analyst
Analyst at Nomura financial services
“"MGL benefits from low per-household gas consumption, while the government has announced 200scm additional APM gas per additional paying household added."”
businesstoday.in
Sources
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