IGL faces Rs 1,000-cr hit due to excess tariff charged
City gas distribution company Indraprastha Gas Ltd (IGL) could take a hit of anywhere between Rs 1000 crore and 1500 crore if has to abide by the April 9 order by the downstream petroleum regulator - the Petroleum and Natural Gas Regulatory Board - directing the company to refund extra tariff charged by it from consumers since April 2008.business Updated: Apr 10, 2012 22:51 IST
City gas distribution company Indraprastha Gas Ltd (IGL) could take a hit of anywhere between Rs 1000 crore and 1500 crore if has to abide by the April 9 order by the downstream petroleum regulator - the Petroleum and Natural Gas Regulatory Board - directing the company to refund extra tariff charged by it from consumers since April 2008.
The regulator's order has also directed IGL to pass on the benefits of tariff reduction in the sale price of piped gas for kitchens and CNG for automobiles.
IGL on Tuesday moved the Delhi High Court against this order asking the company to undertake a substantial cut in its network tariff as also compression charges that it bills to consumers on the sale of piped gas and CNG.
Following this, the company's share price took a major hit and fell down by 33.7%, (down by Rs 16.60) to close at Rs 230 on the Bombay Stock Exchange (BSE).
With the regulator's order likely to set a trend for other city gas distribution companies, the scrip of Gujarat Gas Ltd also fell 15% to Rs 342 on the BSE.
"We have moved to the Delhi high court and have challenged the constitutional and legal powers of the PNGRB to fix the tariff," M Ravindran, managing director, IGL, told HT.
However, PNGRB sources said that if IGL was not sure of the regulator's powers to fix these charges, "Why did IGL kept on sharing the data asked by us and not question our legal and constitutional validity then?"
The regulator has asked IGL to fix the pipeline network tariff at Rs 38.6 per unit against the company's proposal of Rs 104.5. Also, the regulator's order has fixed the compression charge as Rs 2.8 per kg for CNG compared to Rs 6.7 proposed by IGL.
Moreover, the regulator has asked IGL to refund the difference in these two levies to consumers on retrospective basis from April 1, 2008 onwards till date.
"The retrospective nature of the order asking IGL to refund the differential in these charges to consumers from April 2008 could impact IGL's financials by Rs 1000-1,500 crore," a senior company official said on the condition of anonymity. This is the first time the regulator has determined tariff for any city gas distribution player.
"This entire business of CNG and PNG is a retail business, which is a cash and carry business. There are no identifiable customers so retrospective refund is not possible. This the basis on which IGL has gone to High court," Ravindran said.