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Nirmal Bang Report
We see the recently revised natural gas pipeline regulations by the Petroleum and Natural Gas Regulatory Board as a positive catalyst for gas transportation - especially for Gujarat State Petronet Ltd. - following the regulator’s decision to remove the punitive provisions of 50% cut in revenue upside from new pipeline/expansions.
Other favorable changes include the extended timeline of 10 years to achieve normative utilisation – that too fixed relative to 75% of authorised capacity versus 100% earlier; the added capacity linked to new gas sources will not be included in the authorised entity’s capacity (including GSPL’s) for revising gas grid tariff; and set off credit of volume delivered above normative volume for future periods when volume falls below NV.
We see the city gas distribution subsidiary Gujarat Gas Ltd. gaining from reduced gas cost based on the forecast reduction in APM gas price to $6.5/metric million British thermal unit by Q4 FY23E, as per the cap proposed by the latest gas pricing report submitted by the Dr. Kirit Parikh panel.
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