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ICICI Securities: India’s Gas Sector Reforms Gathering Pace

ICICI Securities: India’s Gas Sector Reforms Gathering Pace

A liquefied petroleum gas (LPG) cylinder stands connected to a stove in India.(Photographer: Prashanth Vishwanathan/Bloomberg)
A liquefied petroleum gas (LPG) cylinder stands connected to a stove in India.(Photographer: Prashanth Vishwanathan/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Petroleum and Natural Gas Regulatory Board (PNGRB) Chairman DK Sarraf has indicated that regulations allowing competition in City Gas Distribution (CGD) may be notified by early August 20. We believe Indraprastha Gas Ltd. (IGL) and Mahanager Gas Ltd. (MGL) would be hit by competition being allowed and the impact would be severe if gas price is deregulated. Oil and Natural Gas Corporation Ltd. (ONGC) would gain if gas price is deregulated. He said unified tariff on gas pipelines would be implemented from September 1, 2020 from which Gas Authority of India (GAIL) would neither gain nor be hit; unified tariff pools capex and opex of all inter-connected pipelines leading to lower tariff on expansions but higher tariff for existing consumers. It would bring gains for GAIL by boosting utilisation on its Jagdishpur-Haldia-Bokaro-Dhamra pipeline (JHBDPL).

We expect GAIL’s tariff to be boosted by other amendments to tariff regulation proposed by PNGRB. We reiterate Sell/Reduce on IGL/MGL, Add on GAIL and Buy on ONGC.

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ICICI Securities Gas Sector Update.pdf

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