City gas distributor Indraprastha Gas Ltd. (IGL) informed the exchanges on Thursday, October 17, that the company’s profitability will see an ‘adverse impact’, as it has received lower gas allocation than earlier, confirming a CNBC-TV18 newsbreak from earlier in the day.

Indraprastha Gas’ domestic gas allocation is 21% lower than the previous allocation.

The company further said that it is in discussion with key stakeholders to minimise the impact.

CNBC-TV18 had reported earlier on Thursday citing industry sources that India’s City Gas Distributors, Mahanagar Gas, Indraprastha Gas, among other peers could raise prices after a 20% cut in their gas allocation through the Administered Price Mechanism (APM).

The City Gas Distributors are of the view that CNG prices may need to go up by as much as ₹6 per kg, sources said.

For the reduced APM gas allocation, the loss is likely to be sourced from spot LNG, which is currently priced between $11 to $12 per Million Metric British Thermal Unit (mmbtu) as compared to the APM gas price of $6.5 per mmbtu.

It is now up to the companies to decide whether the full impact of the higher procurement cost can be passed. The APM gas allocation mix is now seen at 49% to 50% from the 69% to 70% earlier.

Shares of Indraprastha Gas ended at the lowest point of the session on Thursday with losses of 3.1% at ₹502.5