Abolition of dividend distribution tax (DDT) is a positive as the PSU oil & gas companies pay large dividend and any savings in this regard will be beneficial for them, unless they hike the dividend rate further.
Gas utilities sector will be a significant gainer from the host of measures announced in the Union Budget 2020, such as expansion of the gas transmission pipeline infrastructure from 16000km to 27000km, and setting up of a “Gas Trading Hub”. These measures should enable the Government achieve its target of 15% of energy consumption mix from natural gas from 6% currently. These measures should be positive for Gas transmission companies, gas marketers, LNG regassification companies besides City Gas Distribution companies. Moreover, gas trading hub should be positive for the upstream oil companies, as it will enable them to achieve higher price levels than the one prevailing currently, which are based on certain formula linked to global prices.
- K. Ravichandran, Senior Vice President & Group Head, Corporate Ratings, ICRA Ltd.