Just one week before the scheduled gas price hike on April 1, the Election Commission (EC) has put it on hold. In a tersely worded order, EC has decided to defer the gas price notification applicable for April-June 2014 (1QFY15). The EC has said that the decision has been taken after considering all the relevant facts, including the fact that the matter is sub- judice in the Supreme Court.
''We have been anticipating that the April gas price hike may become a victim of political rhetoric,'' said Nomura Financial Advisory and Securities.
''For GAIL the expected cost increase due to the gas price hike was Rs 15-16 billion annually (Rs 8-9 for LPG, 4-5 billion for petchem, and 2-3 billion for gas transmission). However, GAIL was expected to get some relief on LPG (due to lower subsidy payouts) and transmission (the gas cost increase would be addressed in revised tariff which are due from Nov-13),'' it said.
''Only for petchem, GAIL would have been required to absorb the cost. While it is difficult to ascertain the exact impact (the government may not give entire subsidy benefit on LPG, or transmission tariff hikes can take time and may not allow entire cost absorption), we think there is immediate positive gain of Rs 3-4 billion in the first quarter. ''
''For City Gas Distribution (CGD) companies, such as IGL and Gujarat Gas, there will not be any immediate earnings impact. Gas price hikes are expected to be negative for these companies, as the hikes would have forced these companies to raise prices (to pass on costs), which would have impacted volume growth,'' it opined.
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