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Informist, Friday, Nov. 14, 2025

By Sunil Raghu and Ashutosh Pati

AHMEDABAD/MUMBAI – Indraprastha Gas Ltd. is seeking to emulate its success in India by setting up a city gas distribution venture in Saudi Arabia, company management told analysts in a post-September quarter earnings conference call on Friday. "Actually, our bigger vision is to create an IGL kind of entity there (in Saudi Arabia). That's the bigger vision," the management said.

Indraprastha Gas signed a strategic alliance-cum-partnership agreement with Saudi Arabian MASAH Construction Co. on Thursday to jointly explore and develop natural gas distribution networks across cities in Saudi Arabia. MASAH Construction will hold 60% equity in the joint venture, and Indraprastha Gas the remaining 40%. Other than investment, Indraprastha Gas will put in expertise and boots on the ground, the management said.

The joint venture is planning to bid for natural gas distribution networks in five cities in the kingdom. Indraprashta Gas expects to invest about INR 1.5 billion and handle volumes of around 4 to 5 million standard cubic meters per day, the company's management said.

The alliance seeks to harness IGL's expertise in planning, design, and operation of gas networks, and MASAH's proficiency in engineering, procurement, and construction, as well as local stakeholder engagement. Saudi Arabia has divided its kingdom into 30 industrial cities, of which it has awarded seven cities for conversion from propane and liquefied petroleum gas to natural gas.
 

Indraprastha and its joint venture partner would bid to support this transition across five industrial cities. Indraprastha Gas assumes that each city has a potential of 1-1.5 million standard cubic meters of natural gas per day. The company's management expects the investment required for this endeavour to be lower than what it would need to invest in India, but the potential volume to be pretty high.

Talking of its Indian operations, the company said its compressed natural gas sales volume in the September quarter was 640.80 million standard cubic metres, up 3% on year. The CNG business contributes roughly three-fourths of the company's overall sales volume. Piped natural gas sales volume for domestic users rose 6% on year to 62.95 million standard cubic metres, while sales to industrial and commercial users also rose 6% on year to 106.75 million standard cubic metres. The volume of natural gas sold by Indraprastha Gas remained unchanged at 46 million standard cubic metres. Overall, the sales volume for the quarter ended Sept. 30 was 856.70 million standard cubic metres, up 3% on year.

Net of excise duty, the company's revenue from CNG sales rose nearly 9% on year to INR 29.98 billion in the September quarter. Revenue from PNG sales increased 10% on year to INR 10.10 billion.

Indraprastha Gas currently operates 955 CNG stations across India, the company management said. The company plans to commission 102 new CNG stations in the current financial year, the management had said in its post-earnings analyst call in June. 

The management said the cut in goods and services tax rates on natural gas from 28% to 18% has improved the competitiveness of CNG compared to alternative fuels, including electric vehicles. This saw 31,000 new CNG vehicle additions in October, compared with an average of 19,000 per month over the 12-month rolling period. "The reduction of value-added tax on domestic gas sourced from Gujarat, from 15% to 2% has also lowered the input gas cost by INR 1 per standard cubic meter and will positively affect EBITDA margins in the coming months," the management said.

On the sourcing of its 7.83 million standard cubic meters of natural gas per day in the September quarter, the company management said that the share of regassified liquefied natural gas, or R-LNG, rose to 37% or 2.9 mscm/d, from 25% earlier. The company was forced to raise its share of R-LNG, as its domestic gas allotment was cut from nearly 50% to 41% in the September quarter. It accounted for 3.25 mscm/d of the total 7.83 mscm/d gas sourced in the quarter.

This rise in LNG's share of the source mix impacted the company's margins negatively in the September quarter. The company management expects global LNG prices to fall from current levels of $10-11 per million British thermal unit equivalent, pushing up margins somewhat.

Regarding the company's capital expenditure, management said they would like to maintain a capex run rate of INR 12-14 billion per year. Having spent INR 5.8 billion in the first six months of the current financial year, it is likely to spend INR 7-8 billion in Oct-Mar.

On Wednesday, Indraprastha Gas reported a near 14% on-year fall in its net profit to INR 3.73 billion in the September quarter. The net profit for the quarter was below the analysts' estimate of INR 4.02 billion. The company's revenue from operations, net of excise duty, during the quarter rose nearly 9% on year to INR 40.23 billion.

Friday, the company's shares closed 1.1% lower at INR 212.66 on the National Stock Exchange. 

End

Edited by Saji George Titus

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