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Electric vehicles are gaining ground fast in key city gas areas and the surge is starting to eat into CNG market share and could weigh on long-term PNG demand too, according to a report by brokerage firm Dolat Capital. This comes in contrast to City Gas Distributors cutting prices to defend market share against propane.
According to Dolat Capital's research report, CNG registrations are still rising across geographical areas (GA) of Mahanagar Gas, Indraprastha Gas, and Gujarat Energy but EV growth is now outpacing it in some geographies. "The Pace of EV registrations has improved significantly in 1HCY26 while in some GAs it has crossed the CNG," the report said. The impact is clearest in MAHGL's areas. "EV adoption rate in MAHGL GAs has grown by 470bps vs a 422bps decrease for CNG adoption rate (From Feb'26 to Jun'26)," Dolat noted. The domestic brokerage firm said that In Mumbai the pace of EV registration is at peak level in Jun'26 and adoptions have also touched at all time high of 11.3 per cent. CNG adoption there stood at 37 per cent in June but "The average CNG adoption rate for 1HCY26 is 37.6 per cent compared to 45.6 per cent in the same period last year." Delhi faces bigger policy headwinds. IGL's CNG adoption was 33 per cent in June, while EV adoption hit a new all time high of 24 per cent in June 2026. The report flagged Delhi EV Policy 2.0 as a direct threat and noted that registration of new CNG auto-rickshaws will stop effective December 31, 2026." It adds, "No new petrol, diesel, or CNG two-wheelers can be registered after March 31, 2028." Dolat estimates this could mean "a long-term CNG volume loss of 0.08mmscmd" for IGL. Despite EVs, near-term CNG volumes are still projected to grow. "If CNG registrations maintain their current pace, this could result in an additional 0.3 mmscmd growth in CNG volume over the next 12 months, indicating a 9 per cent increase in CNG sales volume" for MAHGL. For IGL it's "approximately 0.66 mmscmd (about 8 per cent)" and for GUJENERG "~0.51 mmscmd (~17 per cent)." On the PNG side, competition from propane is intensifying in Morbi. 25-30 units in Morbi are preparing to switch to propane, which will be offered Rs 5/scm cheaper than PNG in July, according to the report. "Gujarat Energy Limited plans to reduce PNG prices by Rs2/scm in early July and further by Rs 4/scm by the month's end," the brokerage said. Dolat expects "Rs6/scm unit Gross margins for PNG segment" despite the cut, but warns "If the Crude & spot LNG remains softer then PNG Price cuts will continue at much faster quantum." With EVs capturing share and propane undercutting PNG, city gas companies face a two-front battle on both volumes and pricing, the brokerage concluded. (ANI)
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