Jun 01, 2012 11:43 PM IST | Source: Moneycontrol.com

Indraprastha Gas surges 29% on favourable Delhi HC's order

The Delhi High Court has ruled in favour of Indraprastha Gas that government regulator Petroleum and Natural Gas Regulatory Board (PNGRB) does not have the authority to fix tariffs. Reacting to the development, IGL surged 29% to close at Rs 249.35 on the BSE.

The Delhi High Court has ruled in favour of Indraprastha Gas that government regulator Petroleum and Natural Gas Regulatory Board (PNGRB) does not have the authority to fix tariffs. Reacting to the development, IGL surged 29% to close at Rs 249.35 on the BSE.

The Delhi High Court has quashed PNGRB's April 9 order. 

In that order PNGRB had lowered IGL's tariffs by over 60% and directed it to enforce this retrospectively from April 2008. Today the Delhi High Court said that IGL will not have to retrospectively refund customers, that could have led to an outgo of Rs1600 cr and make its networth negative.

Sources say IGL is "120%" confident the PNGRB will approach the SC and therefore it is planning to file a caveat at the apex court in the coming days

Meanwhile, other gas stocks Gujarat Gas Company and Gail closed up 14.6% and 8.5% respectively on the BSE.

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Below is the edited transcript of HP Ranina's interview to CNBC-TV18. Also watch the accompanying video

Q: The order states that PNGRB does not have the authority to fix tariffs. Do you think whatever orders PNGRB has ruled against GAIL and other gas utilities will also be reversed?

A: Yes, it will be reserved. PNGRB will now seriously consider whether they will accept the Delhi High Court judgment or appeal in the Supreme Court, as their fundamental jurisdiction is under challenge. Possibly, the government may itself want to clarify by amending the order of the appointing PNGRB, we have to wait and watch how it all pans out. It is a great victory for IGL and other companies.

Q: What would be the key events or sequence of events following this order?

A: PNGRB will have to file an appeal in the SC within 60 days, if they so decide and for that, they need to take an approval from the government. Government may also consider redrafting the law, giving them additional powers so we have to wait and watch what happens in coming 60 days. If the application is file within the stipulated time then the SC may either upheld the order or struck it down.

Q: In 2008 the government granted PNGRB powers to regulate tariff. With this order do you think the court has challenged the government passed order in terms of rights to the PNGRB itself?

A: This Delhi High Court order goes against the ministry and government itself and challenges the root existence of PNRGB. Now, the government will have to come with a clarification, statutory amendment or legislation. As the Parliament is not in session now, they may come up with an ordinance to clarify the law. We have to wait how things work out.

Q: Do you think the government will redraft this law. If you put things into perspective then there could be a complete erosion of networth of IGL if this law actually comes into play?

A: I agree to ypur point. The government needs to take a decision whether they want to assert their authority, or they feel that PNGRB should be given the power. They will once again come out with a clarification and point out their intention. Since the Parliament is not in session they may come up with ordinance to clarify this issue and give power to PNGRB if they so decide.

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