With the Government cutting domestic natural gas prices, ONGC's shares were trading lower on the BSE. At 1.48 pm the share was down 0.29 per cent at about ₹225.80.
On the other hand, shares of gas distribution companies such as Indraprastha Gas, Petronet LNG, Gujarat Gas, and Gujarat State Petronet are trading up 1-4 per cent after the Government slashed natural gas prices by 16 per cent to $ 4.24 per unit.
These companies buy natural gas both on long-term and on spot basis either locally or through imports and, in turn, supply to bulk consumers in sectors such as packaging, food processing, automobiles, electronics, textiles, fertilisers, refiners, cement makers, steel, and power. Around 65 per cent of the customers of city gas distribution companies are industrial customers
The fall in crude oil prices did not proportionately lead to a fall in natural gas prices and other cheaper fuels such as naphtha, fuel oil, furnace oil and petcoke. Hence the mismatch led bulk consumers to move to other fuels.
Now, with the slash in natural gas prices, demand for city gas distribution is expected to again catch up, resulting in higher volumes and, in turn, revenues.