PNGRB alters gas pipeline tariff structure; boost infra-investment
Shares of gas transmission companies such as Gujarat Gas, Indraprastha Gas, Mahangar Gas, Adani Gas, Gujarat State Petronet (GSPL), and Gail rallied up to 19% on the BSE in the early morning trade on Friday after oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) notified regulations for unified gas transmission tariff structure to make the fuel more affordable for distant users and to attract investment for building gas infrastructure.
Among individual stocks, Gujarat Gas soared 19% to Rs 411 on the BSE on the back of heavy volumes. Indraprastha Gas, on the other hand, was locked in the 10% upper circuit at Rs 492. Meanwhile, Mahangar Gas surged 10% to Rs 1,023, Adani Gas gained 9% to Rs 345, Gujarat State Petronet (GSPL) added 18% to Rs 243, and Gail was up 4% to Rs 107 in the intra-day trade today. In comparison, the S&P BSE Sensex was trading flat at 44,259.
Unified tariffs will encourage gas transmission companies to set up new pipelines and will result in long term volume growth.
The tariffs will be applicable based on two zone structure related to distance from source of gas.
The PNGRB has notified regulations for a ‘unified’ tariff structure for over a dozen pipelines that form the National Gas Grid which will lead to a 20-30% rise in transportation charges paid by users near the source but a reduction for consumers in the hinterland. Oil & gas regulator has sweetened City Gas Distribution (CGD) open access by not considering the incumbent’s existing OMC/dealer CNG stations as shipper for allowing access.
PNGRB has also removed draft provisions challenging infra exclusivity such as allowing shipper to set up compressor facilities, cascade supplies and even pipelines in the event incumbent is not able to do so.
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