Fitch Ratings: Fitch Ratings has cut gas consumption in India during the current financial year. The rating agency has reduced India’s gas consumption growth forecast to 5 per cent. The effect of the sharp increase in domestic gas prices will also be seen. Apart from this, due to LNG rates, the pace of adoption of eco-friendly fuel will also be slow.
Rise in the prices of CNG and PNG
The government has more than doubled the price of natural gas from domestic fields to $6.1 per million British thermal units for a period of six months starting April 1. After this the prices of CNG and PNG have increased.
will increase at the rate of 5 percent
The rating agency said that we expect natural gas consumption in India to grow at a rate of five percent in FY 2022-23 (6.5 percent for FY 2021-22) which is lower than our previous estimate of seven percent growth. .
The pace of adoption of natural gas will be slow
Fitch said the recent sharp rise in domestic gas prices and higher LNG prices will slow the adoption of natural gas. At present, about half of the total consumption in the country is met by domestic gas production, while the rest is imported in the form of liquefied natural gas (LNG).
GAIL’s income may increase
Fitch said state-owned GAIL India Ltd.’s earnings from the natural gas marketing segment are likely to increase as spot LNG prices have risen significantly as compared to long-term contracted LNG from the US.
Government oil companies may suffer losses
The rating agency has said that persistently high LNG prices will slow down the growth of gas consumption in India. Fitch said public sector fuel retailers IOC, BPCL and HPCL may face marketing losses in the January-March 2022 quarter. The rating agency said, however, that losses may come down in the near future on strong refining margins and storage gains.