Gas utility stocks took a beating led by Indraprastha Gas Ltd (IGL), which shed almost 34 per cent following the Petroleum and Natural Gas Regulatory Board (PNGRB) directive asking it to cut tariff.
Since the stock is part of the futures and options segment, exchanges do not apply circuit filter. If IGL were to immediately implement the PNGRB notified rates, then it would have resulted in lower consumer tariff. The company has approached the Delhi High Court challenging the constitutionality and legality of the powers of the Board to fix the tariff. While declining to give any quantum on the decline in tariff, Mr M. Ravindran, Managing Director, IGL, said, “Any change in consumer tariff will be effected only after the Court directive.”
Analysts were quick to de-rate the Indraprastha Gas (IGL) scrip on Tuesday. Market-men estimate a balance sheet contraction of Rs 1,500-1,700 crore on refund of excess tariff to customers. Currently, IGL sells compressed natural gas (CNG) at Rs 35.45/kg and piped natural gas (PNG) at Rs 22/scm. The notified network tariff of PNGRB is Rs 38.58/mmBtu (against IGL's tariff of Rs 104.05/mmBtu) and a CNG compression charge of Rs 2.75/ kg (against IGL's Rs. 6.66/ kg) from April 1, 2008. IGL will have to revise its selling prices and refund the difference in the two tariffs with immediate effect. Speaking to newspersons here on Tuesday, Mr Ravindran said: “No separate communication has been received as yet from PNGRB ... No opportunity for personal hearing was given to IGL.” The company expected the Court to hear the matter in a day or two. It has also approached the appellate authority for relief on commercial issue.
The GAIL (India) CMD, Mr B.C. Tripathi, said: “This will have a negative impact on the industry. In an otherwise depressed scenario — domestic gas availability is on the decline and its dependence on LNG growing — City Gas Distribution is the only category where the industry was looking at growth and expansion.”