The Petroleum and Natural Gas Regulatory Board (PNGRB) directive to Indraprastha Gas to refund excess tariff sent the stock into a tailspin. The Indraprastha Gas stock shed seven per cent to close at Rs. 346.4 to a share on the BSE, down Rs 26.35.

Indraprastha Gas told the regulator that it charged a network tariff of Rs 104.05 per MMBTU (million British thermal Units). In addition, it also levied compression charges at Rs. 6.66 per kg for compressed natural gas (CNG).

The tariff was very high compared to the extant PNGRB notified rates.

PNGRB had notified a network tariff of Rs 38.58 per MMBTU and a CNG compression charge of Rs 2.75 per kg from April 1, 2008.

Hence PNGRB directed Indraprastha Gas to reduce its selling prices and refund the difference in the two tariffs with immediate effect.

The regulator also said that it will issue directions on how the company should refund the excess tariff charged to customers for the last four years at a later date.

Analysts expect the stock to be battered further tomorrow. “The PNGRB tariff is less than half the current gross margin of Rs 8 per standard cubic metre made by Indraprastha,” said Mr Kishor Ostwal, CMD,CNI Research. “Profitability may decline by 50 per cent with similar impact on the stock price and a cut in earnings per share by Rs 10. However, the final impact will depend upon what marketing margin the company is able to charge,” he added.

raghavendrarao.k@thehindu.co.in