New Delhi: Shares of Adani Total Gas, Indraprastha Gas and Mahanagar Gas ended higher on Wednesday as the government announced an incentive scheme aimed at expanding PNG networks into new areas.
The stock of Adani Total Gas rallied 2.49 percent, Indraprastha Gas climbed 2.41 percent and Mahanagar Gas went up by 1.63 percent on the BSE.
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"Indraprastha Gas and Mahanagar Gas gained 3-4 percent, following government incentives aimed at boosting domestic piped-gas connections, providing a positive outlook for city gas distributors," Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.
The government will offer city gas distributors an additional 200 standard cubic metres (SCM) of lower-priced domestic natural gas for every new billed household piped-gas connection, stepping up incentives for companies to accelerate the switch from LPG to piped gas to household kitchens for cooking.
The incentive, approved by the government and effective from September 1, will apply to incremental domestic piped cooking gas, or piped natural gas (PNG), connections above a threshold set for each geographical area.
The scheme is aimed at turning inactive, unbilled connections into working ones and expanding PNG networks into new areas, according to an official statement issued by the oil ministry.
India currently has about 17.4 million domestic PNG connections.
The additional allocation of domestically produced, lower-priced APM (administered price mechanism) gas will allow eligible city gas distribution companies to substitute some of the costlier Liquefied Natural Gas (LNG) they currently procure for their Compressed Natural Gas (CNG) transport business, lowering their overall gas-sourcing costs.
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The resulting savings are expected to cut the payback period on capital spending for domestic PNG connections to about three years from around 10 years, strengthening the financial incentive for distributors to expand household connections, the government said.
The push to expand PNG gained momentum during the West Asia crisis earlier this year, when disruptions to LPG supplies prompted the government to seek ways to reduce dependence on cylinders, particularly in the commercial sector.
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