 "Haldia Petrochemicals")
Shares of Gujarat State Petronet (GSPL) locked in a 20 per cent lower circuit at Rs 302.30 on the BSE on Monday at 09:23 AM. This came after the Petroleum and Natural Gas Regulatory Board (PNGRB) issued a tariff order for GSPL’s HP gas network. The revised tariff will be applicable from May 1, 2024, PNGRB said in an order dated April 20, 2024.
A combined 4.08 million equity shares changed hands and there are pending sell orders for 4.57 million shares on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.5 per cent at 73,423.
The tariff was reduced to Rs 18.1 per metric million british thermal unit (mmbtu) from Rs 34.0/mmbtu (provisional). GSPL had requested for an upward tariff revision to Rs 50.77/mmbtu. The key difference between GSPL and the regulator’s view stems from three heads including capex (Rs 13.7/mmbtu reduction), opex (Rs 8.7/mmbtu reduction), and volume divisor (Rs 11/mmbtu reduction).
The tariff has been worked out based on information provided by the entity and deliberations above. However, the consideration of any capex, opex or economic life in tariff determination does not tantamount to authorisation and information to PNGRB. And the same needs to be taken given by the entity from PNGRB in terms of the extant regulatory framework, PNGRB said.
Further, PNGRB said it may verify or audit the information provided for tariff determination and method of cost allocation, etc. by the internal team of PNGRB or by an external agency. Accordingly, tariff as determined above will be subject to revision based on aforesaid authorization, information, economic life, verification of the information, data, method of allocation, etc. submitted by the entity, it added.
The tariff of GSPL HP would be reviewed in the next financial year if there is a considerable variation in actual volume flows (in line with GSPL’s submission of 26 MMSCMD) as compared to the expected volume i.e. 31.67 million metric standard cubic meters per say (MMSCMD) considered by the Board in this Tariff Order, PNGRB said. CLICK HERE FOR FULL DETAILS
According to Motilal Oswal Financial Services (MOFSL), the tariff can be reviewed in the event that actual volume flows (GSPL’s submission: 26 mmscmd) vary considerably from PNGRB’s assumption of 32 mmscmd. Further, the brokerage firm believes that GSPL may appeal to PNGRB to review its tariff decision, though MOFSL does not expect any near-term relief.
“This decision is a major disappointment. We were building in a tariff decline of 15 per cent YoY in FY25, while the actual decline in tariff for the HP gas grid stands at 47 per cent. At this revised tariff, our FY25-26E EPS will see a sharp reduction of 40-45 per cent. The target price (TP) impact, though, will likely be lower (18 per cent) as the core business accounts for only Rs 180/ share out of our TP of Rs 450,” MOFSL said in a company update.
