GAIL Share Price: Shares of GAIL (India) slumped as much as 6.5 per cent intraday to Rs 171.80 on the BSE on Friday after investors reacted negatively to the latest transmission tariff order issued by the Petroleum and Natural Gas Regulatory Board for the company’s Integrated Natural Gas Pipeline (INGPL) network.
Under the new order, the regulator revised the unit pipeline tariff to Rs 77.98 per MMBTU, effective from January 1, 2025, from the existing rate of Rs 58.61 per MMBTU. However, the hike fell short of market expectations, particularly in light of the company’s increasing operating and capital costs.
As per the tariff filing, GAIL had sought a levelised tariff based on a 30-year economic life for the INGPL, factoring in cumulative operating
expenditure of about Rs 1.83 lakh crore and capital expenditure exceeding Rs 56,000 crore up to FY2049. Nearly Rs 17,775 crore of this is future capex, largely earmarked for maintaining ageing pipeline assets, some of which will cross 60 years by the end of the period.
Further adding to investor concerns, the regulator has postponed full recognition and recovery of several cost components — including actual capex, opex, transmission losses and working capital — until the next tariff review cycle scheduled for FY2027-28. For now, only interim relief has been granted, with a comprehensive true-up to be considered from April 2028 onwards.
The board also rejected the company’s review petitions related to gas allocation changes, tie-in capacities and the inclusion of certain customers earlier categorised as “dedicated” in South Gujarat. This effectively locks GAIL into the current tariff framework for the next three years, limiting its ability to fully recover costs and likely putting pressure on medium-term margins.
Additionally, the regulator declined the company’s request to include capex linked to pipelines serving five customers in the common carrier asset base, maintaining that these continue to be treated as dedicated customers.
Overall, the tariff outcome has weakened earnings visibility, given the ageing infrastructure, deferred cost recovery and lingering uncertainty around full pass-through of large investments.
