PGNiG Sinks as Polish Regulator Orders Cut in Retail Gas Prices

PGNiG slid the most in two months after the Polish energy regulator unexpectedly said the nation’s dominant gas company must reduce prices for the second time in less than a year, triggering concern the move may weigh on profit.

State-controlled Polskie Gornictwo Naftowe i Gazownictwo, as the company is formally known, slid 5.5 percent as of 1:03 p.m. in Warsaw to 6.53 zloty. That trimmed its gain on the benchmark WIG20 Index this year to 47 percent. Agnieszka Glosniewska, a spokeswoman for the regulator, confirmed a report by Parkiet on Friday that the watchdog had asked PGNiG last month to apply for lower prices. The company will need to respond to the request by the end of Friday, she said. Warsaw-based PGNiG said it will give an answer.

PGNiG has benefited from lower crude prices, with first-quarter profit rising 5 percent. Today’s move by the regulator follows its decision in December to lower gas tariffs for PGNiG’s commercial customers for the year. Prior to today’s slump, PGNiG was the best performer on the benchmark gauge in Warsaw in 2015.

The cut may “bring forward the normalization of gas-trading margins and profits versus the unusually large profits PGNiG has been able to generate,” Robert Rethy, a Prague-based analyst at Wood & Co. brokerage, wrote in an e-mailed note. Lower retail gas prices are also set to hurt the company’s fourth-quarter net income during a “consumption-heavy period,” he said.

Parkiet on Friday reported the regulator, known as URE, last month requested PGNiG apply for lower prices for retail and small and medium-sized enterprise customers.

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