Gas Regulator Hikes GAIL's Integrated Pipeline Tariff
GAIL sought a revision to Rs 68.55/mmBtu, but the regulator assumed lower cost of gas to arrive at the set tariff.
The Petroleum and Natural Gas Regulatory Board has hiked the integrated pipeline tariff of GAIL (India) Ltd. by 45% to Rs 58.61 per million metric British thermal unit.
Analysts said the long-awaited increase, which would be effective from April 1, would help GAIL boost its finances and increase investments in the natural gas sector.
GAIL had sought a revision in its integrated pipeline tariff to Rs 68.55 per mmBtu. However, the oil and gas regulator assumed lower cost of high pressure/high temperature and regulated gas to arrive at Rs 58.61 per mmBtu tariff. City gas distribution companies also submitted their views to the regulator, considering the impact of higher tariff on end consumers.
"The integrated tariff at Rs 58.61 per mmBtu is better than our rough expectation of Rs 55 per mmBtu as against Rs 68.55 per mmBtu filed by GAIL," Deven Choksey, managing director of brokerage house KRChoksey Holdings Pvt., said.
A cut of around Rs 5.8/mmBtu happened as the PNGRB assumed lower gas cost, while Rs 1–1.5/mmBtu cut was on capex, volume divisor and pay revision, according to Choksey.
The Union government has targeted to increase natural gas contribution to India's overall energy mix to 15% by 2030 from 9% at present.
The natural gas industry in India has been growing steadily with the government's focus on increasing the share of natural gas in the energy mix. The increase in tariffs is expected to encourage investments in the sector and is likely to boost the growth of natural gas industry in the country.
GAIL is one of the largest natural gas processing and distribution companies in India, with a pipeline network spanning thousands of kilometers across the country.
Shares of GAIL closed 0.38% higher on Wednesday, as against a 0.24% increase in the benchmark Sensex.
The 10 pipelines of GAIL considered under the integrated pipeline tariff are:
1) Hazira-Vijaipur-Jagdishpur-GREP-Dahej-Vijaipur
2) DVPL-GREP capacity augmentation
3) Dahej-Uran-Panvel-Dhabol
4) Dabhol-Bengaluru
5) Chhainsa-Jhajjar-Hissar
6) Dadri-Bawana-Nangal
7) Jagdishpur-Haldia-Bokaro-Dhamra
8) Baroda Sub Network (Gujarat Natural Gas Pipeline Network)
9) Uran Thal Usar Sub Network (Mumbai Regional Network)
10) Trombay Sub Network (Mumbai Regional Network)
