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IGL - Indraprastha Gas News Story

₹504.2 6.1  1.2%

Last Trade - 20/04/21

Sector
Utilities
Size
Large Cap
Market Cap £3.37bn
Enterprise Value £3.14bn
Revenue £519.7m
Position in Universe 107th / 3108

UPDATE 1-India to launch rules to end gas distributors' monopoly in 34 areas

Tue 16th July, 2019 10:03am
* Rules will allow new players to use networks of incumbents
    * 34 areas in 11 states would be opened up to newcomers
    * Move could provide new opportunities for aggressive
players

 (Adds industry context, details)
    By Nidhi Verma and Promit Mukherjee
    NEW DELHI, July 16 (Reuters) - The Indian government is set
to introduce rules in six months that could lead to the
phase-out of monopolies controlled by natural gas distribution
companies in 34 cities, including New Delhi and Mumbai, allowing
many consumers to choose a new supplier, a senior regulatory
official said.
    In 2009, natural gas supply regulator - the Petroleum and
Natural Gas Regulatory Board (PNGRB) - gave exclusive gas
marketing rights, initially for five years, to companies who had
established gas distribution networks in cities across the
country. 
    It allowed them to use their pipelines exclusively for 25
years to help them recover billions of dollars they had
invested.
    However, now one of the three members of the PNGRB's board
said the regulator is soon moving to open up the still
relatively new business to competition.
    "These companies have more than recovered their costs as
indicated by their profitability and market cap," said the board
member, Satpal Garg, who is in control of its commercial and
monitoring responsibilities.
    The rules will be ready in three months, and implementation
would take another three months as the regulator will first seek
feedback from companies and the public, he said.
    The move could affect the business of GAIL (India) Ltd
 GAIL.NS , formerly known as Gas Authority of India Ltd, the
biggest gas distributor in the country. 
    GAIL has direct or indirect control of many of the
single-city distributors, such as Mahanagar Gas Ltd  MGAS.NS  in
Mumbai, Indraprastha Gas Ltd  IGAS.NS  in New Delhi. They could
now face new competition.   
    Another major player, Gujarat Gas Ltd  GGAS.NS , could see
potential rivals consider moving into the 11 cities in which it
distributes gas, including Jamnagar, Ahmedabad, Hazira, Surat
and Rajkot in western Gujarat state.
    Some cities awarded to Indian Oil  IOC.NS  and Adani Gas Ltd
 ADAG.NS  would also now be open to new distributors, under the
new provisions.
    The liberalisation could, though, also allow some better
capitalised and more aggressive firms, including some associated
with GAIL, and Adani Group, to challenge existing distributors
in other cities. 
    No immediate comment was available from the five companies.
    

 (Reporting by Nidhi Verma
Editing by Martin Howell)
 ((nidhi.verma@thomsonreuters.com; +91 11 49548031; Reuters
Messaging: nidhi.verma.thomsonreuters.com@reuters.net))
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