Gujarat State Petronet shares hit 20% lower circuit after regulatory board reduces tariff

Shares of Gujarat State Petronet were locked in a 20% lower circuit limit after the recent tariff revision by the regulator.

The stock of the government-owned company tanked 20% to hit the lower circuit limit of ₹302.15 apiece on the NSE on Monday, April 22, following the decision of the Petroleum and Natural Gas Regulatory Board (PNGRB) to cut the pressure transmission tariff on the company’s Gujarat pipeline network by 47%.

The PNGRB directive could directly impact revenue and cash inflow of gas distribution companies.

The new rates in pressure transmission were 47% lower than existing tariff, which now stands at ₹18.1 per million metric British thermal unit (mmbtu). Previously, the rates were ₹34 per mmbtu.

This reduction in tariffs contrasts with the ₹50.8 submitted tariff by Gujarat State Petronet. In the earlier tariff, which took effect from 2018, GSPL had requested ₹64.70 per mmbtu, but received ₹34 per mmbtu from PNGRB.

Various reports indicate that the three-year delay resulted in an impact of ₹11.1 per mmbtu, with prospective implementation, higher past volumes, and economic life extension also contributing factors.

According to reports, the Petroleum and Natural Gas Regulatory Board (PNGRB) decided to cut the tariffs due to lower capital expenditure (capex), higher volumes, and lower operational expenditure (opex). PNGRB considered a future capex outgo worth ₹1,800 crore against GSPL’s claim of a total capex outgo of ₹3,400 crore. Approval for operating expenditure was also lower at ₹2,600 crore against GSPL’s demand of ₹5,000 crore.

The new tariffs are reportedly going to take effect from May 1, 2024.

Shares of Gujarat State Petronet Ltd were trading 19.11% lower at ₹305.5 apiece at 3:20 pm.