Here’s why shares of MGL and other city gas players surged up to 6% on Wednesday

Shares of city gas distribution companies Indraprastha Gas Ltd. and Mahanagar Gas Ltd. gained as much as 6% on Wednesday, March 25, after new policy measures and supply concerns linked to the ongoing West Asia conflict came into focus.The war in West Asia is expected to disrupt LPG and LNG supplies for an extended period, with potential impact arising from damage to energy facilities in the Gulf and possible blockages in the Strait of Hormuz.

Meanwhile, the Centre has notified a new “switch to PNG” framework that lays down uniform rules for city gas distributors to roll out gas pipelines.
The framework allows consumers to migrate to piped natural gas wherever pipeline connections are available and aims to streamline the process for CGD companies.The new rules address key issues such as land access, delays in approvals, and high fees and charges associated with pipeline deployment.

Under the framework, LPG supply may be stopped after three months for consumers who do not respond to notices for switching to PNG. Oil marketing companies will inform residents about the discontinuation of LPG supply once the three month notice period expires.

The government has also specified timelines to speed up implementation. Land access or right of way approvals must be granted within three working days, while domestic PNG connections are to be provided within two days.

According to Sujata Sharma, Joint Secretary at the Ministry of Petroleum and Natural Gas, the Petroleum and Natural Gas Regulatory Board has directed CGD entities to provide PNG connections to residential institutions such as schools, colleges, hostels, community kitchens and anganwadi kitchens within five days wherever pipeline infrastructure is available nearby.

Sharma added that around 60 lakh households can be given PNG connections immediately, and the government has urged consumers to switch quickly where the infrastructure already exists.