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The company being pulled up by the PNGRB was observed in the paper, accessed by CNBC-TV18.
PNGRB wrote in its paper that despite Dahej’s plan to expand to 22.5 MMTPA, its re-gas charges have escalated by 5% annually and now stand at an enhanced level for the entire capacity.
“Rising charges while capacities have increased along with over 90% capacity utilisation has led to the company (Petronet LNG) being able to profit immensely at the cost of gas consumers,” the PNGRB wrote. “As new terminals are established nationwide, they follow the same tariff basis as Dahej, which needs reconsideration,” the regulator added.
The PNGRB has also written in its paper that there is a need for a regulatory framework to bring regassification activity under its purview. According to the PNGRB, this move is essential to ensure fair pricing, transparency and efficient utilisation of LNG import infrastructure.
“Some regasification terminals are designed for further expansion, potentially doubling their existing capacity. However, the benefits of such expansions are not shared with existing customers through reduced regasification charges,” PNGRB wrote in its paper.
Petronet LNG being called out by the regulator was also highlighted by brokerage firm Citi in its note. Citi has a “sell” rating on Petronet LNG with a price target of ₹310.
Citi believes that the latest PNGRB move clearly introduces a meaningful regulatory risk for the company.
“Together with increasing competition, we believe this adds to the uncertainty on the sustainability of Petronet LNG’s historically strong pricing power,” Citi wrote in its note.
As a result, the brokerage has opened a 90-day Negative Catalyst Watch on Petronet LNG. Citi’s price target implies a potential downside of 10% from Wednesday’s closing levels.
In response, Petronet LNG said that the published paper said that the regulation of LNG terminals does not fall under the purview of the PNGRB and any such regulation will require amendment(s) in the PNGRB Act of 2006.
The company further said that PLL’s Dahej terminal offers competitive and one of the lowest Regas charges as compared to any other terminals in the country. “Such regas charges have been fixed on the basis of agreements between Petronet LNG and various users / capacity.
Additionally, LNG regas charges constitute only 5% to 6% of delivered gas price to the consumer. “Also, the regas tariff in the country is market determined and there is no monopoly in the regas terminal business,” the company said in its clarification.
Shares of Petronet LNG are trading 4.7% lower at ₹331.15. The stock has begun 2025 on a negative note, having gained 55% in 2024.
First Published: Jan 2, 2025 9:48 AM IST
