Gas regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has released a unified tariff structure for more than a dozen pipelines, most of which belong to GAIL. This move is aimed at boosting gas consumption in the country. Jal Irani, Senior Vice President, Institutional equity Research at Edelweiss Financial Services share his views on the development.
“Clearly the winners are the gas pipeline companies such as GAIL and GSPL because while this clearly states that it does not change the pipeline tariff at an entity level so whatever tariff GAIL and GSPL has currently earning will continue,” Irani told CNBC-Tv18.
“So as the tariff does not change, there is a significant opportunity for a volume increase in the longer term and that is a significant potential gain for the pipeline companies,” he said.
“Gas will now become very fungible across the LNG terminals and will find the markets in deeper geographies. The upstream gas producers which could potentially get a better price as a result of this gas exchanges and gas marketing companies, - so these are essentially the list of positives,” he said.
On GAIL Irani said that it was not a pure-play gas pipeline oil business.
“GAIL is actually an energy conglomerate, it is not a pure play on gas pipeline business, about half of its profits come from the gas pipeline business. Part of the earnings increase will come from also higher oil prices. So it is a leverage play on oil as well and oil has rallied by 25 percent,” he said.
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