Gail, GSPL gain as Cabinet approves gas import

GSPLrallied 8% to Rs 128, while Gail (India) up 2% at Rs 387 on the National Stock Exchange.

Shares of Gail (India) and Gujarat State Petronet (GSPL) were trading higher on the bourses in early morning trade on reports that the government will be allowed these companies to import gas on spot basis.

GSPL has rallied 8% to Rs 128, while Gail (India) up 2% at Rs 387 on the National Stock Exchange (NSE). At 0919 hours, the CNX Nifty was down 0.53% at 8,485 points.

The Cabinet Committee on Economic Affairs on Wednesday approved the import liquified natural gas for supply to gas-based power plants stranded due to a shortfall in the production of domestic natural gas in the country.

Speaking to reporters after the meeting, Power and Coal Minister Piyush Goyal told reporters that "GAIL and GSPL (Gujarat State Petronet Limited) will be permitted to import gas by purchasing on a spot basis from the international market and supply to companies, who can bid for this gas depending on their requirements,” IANS report suggests. CLICK HERE TO READ FULL REPORT.

Government will provide subsidy directly to the distribution companies for purchasing gas based power.

Piyush Jain, a research analyst with Morningstar Investment Adviser believes that pipeline companies like Gail would still derive incremental revenue from this policy owing to increase in the pipeline capacity utilisation. "Over the medium term, as regasification terminal projects fructify in different stages over the next couple of years, we would see a steady increase in supply of imported LNG and gas based power," he said in a note.