New Delhi: Shares of state-owned GAIL (India) Limited fell by over 6% in early trading on Friday following the Petroleum and Natural Gas Regulatory Board (PNGRB)’s long-awaited announcement of a 12% hike in integrated natural gas pipeline (INGPL) tariffs. The revised tariff has been set at Rs 65.7 per Million Metric British Thermal Unit (MMBtu), up from the current Rs 58.6 per MMBtu, and will be effective from January 1, 2026.
Tariff Revision Details
- Revised Transmission Tariff: Rs 65.7 per MMBtu
- Current Tariff: Rs 58.6 per MMBtu
- Increase: 12%
- Effective Date: January 1, 2026
- Next Review: April 1, 2028
The interim revision is below expectations, as GAIL had sought a rate of Rs 78 per MMBtu. Analysts note that while the hike provides partial relief to the company, it is substantially lower than the 35% increase projected by GAIL earlier, which could have boosted pre-tax earnings by up to Rs 3,400 crore annually.
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Rationale Behind the Hike
The tariff adjustment applies to the integrated pipeline network, which carries about 90% of GAIL’s total natural gas volume, serving power plants, fertiliser units, and city gas distribution operators.
The revision is aimed at:
- Covering rising operational and maintenance costs
- Incentivising investment in pipeline infrastructure
- Addressing capital expenditure related to pipeline expansion
Since 2018, tariffs in this regulated segment had not been revised despite significant growth in GAIL’s pipeline network. To mitigate the impact on end-users, PNGRB has provided interim relief, with a full tariff adjustment scheduled in FY28.
Market Reaction
The announcement triggered a decline in GAIL shares in early trading, reflecting investor concerns over the smaller-than-expected tariff increase. While the interim hike will partially support revenue, analysts suggest that GAIL’s full financial benefit will be realized only after the next comprehensive tariff review.
About GAIL
GAIL (India) Limited is a state-owned natural gas processing and distribution company and India’s largest integrated gas entity. It operates an extensive pipeline network across the country, delivering gas to industrial, power, and city gas distribution customers. GAIL plays a pivotal role in India’s energy infrastructure, contributing to both energy security and industrial growth.
