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APM (administered price mechanism) gas allocation & CNG economics
What it is
City gas distributors receive administered price mechanism gas for CNG and domestic piped supply, at prices well below imported LNG. Allocations have been cut as domestic output declined, forcing costlier LNG into the mix
Marketing exclusivity in a licensed area expires after a defined period, after which open access applies
Impact on industries
- APM allocation cuts directly compress the CNG margin, since the retail price cannot rise as fast as the input mix shifts toward LNG
- The CNG price gap against petrol and diesel is the entire consumer proposition, so narrowing it slows conversion of the vehicle base
- Marketing exclusivity expiry opens established networks to competitors who did not fund the pipeline build
- Network density economics are strongly favourable once built - incremental connections on an existing network are highly profitable
- EV competition targets exactly the CNG use case in two- and three-wheelers and fleets, where running cost drives the decision