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Indraprastha Gas, GAIL shares slump on fears of tariff cuts

Shares of gas utility companies slumped amid reports that Petroleum and Natural Gas Regulatory Board has directed them to cut gas tariffs in Delhi.

BT Online Bureau   Mumbai     Last Updated: April 10, 2012  | 16:34 IST

Indraprastha Gas shares nosedived on Tuesday after Petroleum and Natural Gas Regulatory Board (PNGRB ) directed the company to cut CNG tariffs in Delhi.

IGL currently charges a network tariff of Rs 104.05 per mBtu (million British thermal Units). In addition, it also levies compression charges at Rs 6.66 per kg for compressed natural gas (CNG).

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Following the directive, shares of the company fell sharply by 45.85 per cent to a 52-week low of Rs 187.70 at the National Stock Exchange (NSE) during the day. On the BSE, IGL fell 34 per cent to end at 229.

Declines were also seen in other gas-related stocks on similar concerns over the Board's reported directive.

Among other gas utilities, GAIL India ended over 1 per cent lower.

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"Revision in prices has battered the stock. Profitability of IGL may decline by 40 per cent with similar impact on the stock price and a cut in earnings per share," Kishor Ostwal CMD CNI Research said.

Oil regulator PNGRB has slashed the network tariff and CNG compression charge IGL billed on sale of piped cooking gas to households and CNG to automobiles in the national capital, by over 60 per cent and asked the firm to refund to consumers the excess amount charged since 2008.

The Petroleum and Natural Gas Regulatory Board (PNGRB) in an April 9 order fixed IGL's pipeline network tariff at Rs 38.58 per million British thermal unit as against Rs 104.05 per mmBtu proposed by the company.

It also cut compression charge for CNG to Rs 2.75 per kg from Rs 6.66 per kg submitted by IGL.

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