Some analysts feel that the gas volume of Gujarat Gas Co. may be muted in the coming months because of falling domestic output of natural gas.
The company may hesitate to import regassified liquefied natural gas (RLNG) as it is costlier than domestically produced gas. Also, most of Gujarat Gas consumers are from the industrial segment and this limits the companyÂ’s ability to increase costs, some analysts feel. This means that gross spreads could very well be under pressure, analysts opine.
For the last several months, the company has been facing volume pressure. Gujarat GasÂ’s volumes came in at 264 million metric standard cubic metre (mmscm) in the March quarter, the lowest at least in the past 14 quarters.
The decline in volume last quarter is attributed to higher gas costs and lower demand from industrial segment customers.
Gujarat Gas is not the only company suffering decline in gas volume. Another city gas distributor, Indraprastha Gas (IGL), has faced volume pressure in the March quarter.
But some analyst expect IGL to witness rise in the compressed natural gas volumes going forward as the state (Delhi) government introduces 2,500 new buses during the year. Likely addition of 45,000 new autos going forward will also add to volume momentum, Standard Chartered Research analysts wrote a 24 May note.
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