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Key business perspectives from the annual reports of GUJGA, IGL and MAHGL

* The onset of Russia-Ukraine war sent spot LNG prices soaring to a peak of USD54/mmBtu in Aug’22. Domestic APM prices also reached USD8.6/mmBtu during the Oct’22-Mar’23 period. As a result, CNG turned expensive in a few cities as compared with dirtier alternate fuels such as petrol and diesel.

* In order to encourage the shift to CNG (a cleaner fuel), the government had constituted the Kirit Parikh Committee to relook into the pricing mechanism of domestic APM gas. On 6th Apr’23, the Union Cabinet granted approval for the implementation of the recommendations put forth by the Kirit Parikh Committee for pricing of natural gas.

* Under the new pricing mechanism, natural gas produced from legacy fields will be priced at 10% of the Indian crude basket’s price, subject to dynamic floor and ceiling prices of USD4/mmBtu and USD6.5/mmBtu respectively. We glanced through the annual reports of the three CGDs and below are the key takeaways from the same 

CGDs continue to witness customer additions despite high gas prices

* IGL added 0.31m new PNG connections, taking its total number of consumers to 2.37m. MAHGL also added 0.14m domestic customers, its highest ever addition during a fiscal year, taking its total household count to 1.51m. Comparatively, GUJGA added 0.18m domestic customers, taking the total number to 1.93m.

* GUJGA’s addition of new CNG stations stood at 102. For IGL, the same stood at 81, while MAHGL added only 24 CNG stations. At the end of FY23, GUJGA’s total CNG stations stood at 808, while that of IGL and MAHGL stood at 792 and 313, respectively.

* GUJGA services 4,360 industrial and 14,390 commercial customers. IGL services around 3,913 industrial and 5,108 commercial consumers. MAHGL services 4,558 Commercial and Industrial consumers.

* In terms of pipeline infrastructure, GUJGA remains way ahead of the other two, with a total network of 35,650km (MDPE/steel), while IGL and MAHGL has a total network of 22,500km and 6,535km, respectively.

MAHGL and GUJGA witnessed margin expansion; IGL witnessed contraction

* IGL’s gross margin fell to INR12.6/scm in FY23 from INR13/scm in FY22. On the other hand, MAHGL saw an improvement in gross margin to INR14.9/scm in FY23 from INR13.8/scm in FY22, while GUJGA’s gross margins improved to INR11.4/scm in FY23 from INR7.8/scm in FY22.

* IGL’s EBITDA/scm declined to INR6.9/scm in FY23 from 7.4/scm in FY22, due to gas cost more than doubling to INR35.4/scm. MAHGL also witnessed a similar surge in gas cost; however, EBITDA/scm increased to INR9.5/scm in FY23 from INR8.4/scm in FY22, as it was able to pass on the increased cost to end customers. Despite GUJGA’s gas cost/scm rising by ~26% YoY in FY23, EBITDA/scm increased ~47% YoY to INR11.4 due to price hikes implemented by the company. 

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