Price of 4.2 is sustainable by the market: Prateek Agarwal, Bharti AXA Investment Managers

Prateek Agarwal, Head of Equity, Bharti AXA Investment Managers, in a chat with ET Now gives his views on the SC verdict on RIL-RNRL gas dispute and the pricing aspect of the gas.

Talking about the RIL-RNRL gas dispute, how bad does 4.2 look on the face of it because clearly landed cost of gas that many of the other power producers are getting is fairly high?

Correct, I mean depends on what kind of plant you were thinking of putting up to generate power what kind of a PPA one was thinking of having. So if it’s a cost plus kind of a deal that one was thinking of having and the input fuel price is a pass through, given the current retail price of power, I think it is sustainable by the market.

However, the whole twist is if you want to buy gas cheap and sell power merchant. Clearly in the new scheme of things the amount of money that one may end up making would be significantly lower than earlier.

As far as the gas scenario goes I think today the prices of natural gas on a global basis are at a low but they vary too much region by region. Regions which are deficit in energy including India have a higher price of gas. Gas prices are reasonably low in the Gulf and primarily in the US.