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Petronet LNG shares: Petronet LNG share price cracked on the bourses today, tumbling 8.46 per cent to Rs 317.95 per share on the BSE. The shares hit a low of Rs 317.8 per share on the NSE.
The weakness in Petronet LNG share price came amid reports of regulatory body Petroleum and Natural Gas Regulatory Board (PNGRB) pulling up Petronet LNG for levying higher charges.
According to several media reports, which Business Standard couldn’t independently verify, PNGRB said that despite Dahej's plan to expand its capacity to 22.5 MMTPA, the re-gas charges have risen by 5 per cent annually.
“Rising charges at a time when the capacities have increased, in addition to over 90 per cent capacity utilisation, has resulted in Petronet LNG to generate profits immensely at the cost of gas consumers," PNGRB reportedly pointed out.
"As new terminals are established nationwide, they follow the same tariff basis as Dahej, which needs reconsideration," the regulator added.
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PNGRB, thus, possibly suggested to bring regassification activity under a regulatory framework to ensure fair pricing, transparency, and efficient utilisation of LNG import infrastructure.
Notably, Petronet's Dahej LNG terminal is the largest single-location LNG storage and regasification terminal in the country. It clocked a 7 per cent growth in throughput year-on-year at the end of the September quarter this year.
The terminal witnessed an average capacity utilisation of 104 per cent in the first two quarters of the current year. It processed 225 trillion British thermal units (tBtu) of LNG in Q2, as against 210 tBtu in the corresponding period of FY24.
Taking cognizance of the suggestion, global brokerage Citi has opened a 90-day Negative Catalyst Watch on Petronet LNG as the move, if implemented, may introduce a meaningful regulatory risk for the company, Citi said.
"Together with increasing competition, we believe this adds to the uncertainty on the sustainability of Petronet LNG's historically strong pricing power," Citi said.
The brokerage has maintained its ‘Sell’ rating on Petronet LNG stock with a share price target of Rs 310.
In the July-September quarter, Petronet LNG reported a 1.73 per cent year-on-year increase in consolidated profit at Rs 870.6 crore, up from Rs 855.74 crore in Q2FY24.
On a sequential basis, profit fell 21.2 per cent from Rs 1,105.47 crore registered in the preceding quarter.
The public sector enterprise reported a revenue growth of 3.92 per cent Y-o-Y, at Rs 13,024.29 crore, from Rs 12,532 crore registered in Q2FY24.
What Petronet LNG said about the report?
Issuing clarification to the stock exchanges after the massive fall in Petronet LNG share price today, the company said regulating LNG Terminals or its tariff does not fall under the purview of PNGRB. Moreover, any regulation for regulating LNG Terminals and its tariff would require amendment(s) in the PNGRB Act, 2006.
"PLL's Dahej terminal offers competitive and one of the lowest Regas Charges as compared to any other terminals in the country. Such regas charges have been fixed on the basis of Agreements between Petronet LNG Limited and various users/capacity holders. Further, LNG regas charges constitute merely around 5 per cent to 6 per cent of delivered gas price to the consumers. Also, the regas tariff in the country is market determined and there is no monopoly in regas terminal business," Petronet LNG said in a stock exchange filing.
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