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IGL Wins As Delhi HC Quashes PNGRB Order

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[The Delhi High Court on Friday ruled in favour of city gas utility Indraprastha Gas Ltd, or IGL, which had contested a directive from a government regulator to cut gas tariffs in New Delhi, leading to a nearly 30 per cent surge in shares. The court ruling settles, for the time being, the uncertainty regarding margins that gas utilities are allowed to earn. The regulator's order in April had dragged down sector stocks over worries similar action on other utilities would hit profit margins. India caps prices of petroleum and natural gas products. Stocks of other sector utilities gained. Gujarat Gas rose 15.2 per cent, while Petronet LNG was up 8.5 per cent. State-run gas utility GAIL India closed 3 per cent higher. "If this order remains final, IGL's fair value will increase by 30-40 per cent. Removal of regulatory overhang would also benefit other gas utilities," said Ashutosh Bharadwaj, analyst at Nirmal Bang Institutional Equities. "We have to see whether PNGRB goes to Supreme Court or (seeks) some other legal remedy," he added. The Delhi High Court quashed the regulator's order asking IGL to cut some tariffs by nearly 60 per cent, and said PNGRB could not fix network and compression charges, the company said in a release to the exchange. A copy of the order was not immediately available. A growing number of power plants, industries, and city gas projects have pushed up natural gas demand in Asia's third largest economy. India's current gas demand of 166 million cubic metres a day (mmscmd) is projected to rise to 443 mmscmd by 2017. State-owned GAIL is expanding its pipeline network by more than 50 per cent to meet rising demand, and overseas players, including Spain's Gas Natural Fenosa and Germany's E.ON AG, have shown interest in acquiring presence in the market through a stake-buy in city gas utility Gujarat Gas. (Reuters)