IPCL takes GAIL to Oil Ministry | india | Hindustan Times
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IPCL takes GAIL to Oil Ministry

IPCL has approached Petroleum Ministry against the supply termination notice served by gas transportation firm GAIL.

india Updated: Feb 23, 2006 13:09 IST

Reliance Group company IPCL has approached Petroleum Ministry against the supply termination notice served by gas transportation firm GAIL India Ltd saying the state-owned company was not entitled to charge marketing margin on the Government-controlled gas it sold to industries.

GAIL had on February 9 served a notice to terminate gas supplies to Indian Petrochemicals Corp Ltd (IPCL) unless it cleared Rs 64.02 lakh outstanding towards marketing margin.

An Oil Ministry official said GAIL had demanded a marketing margin of Rs 222 per thousand cubic metres on the government administered or APM gas which it was supplying to IPCL's plants at Baroda, Gandhar (Gujarat) and Nagathone (Maharashtra).

"Government's Gas Pricing Order, which revised APM gas price to Rs 3,200 per thousand cubic metres with effect from July 1, 2005, does not provide for any marketing margin over and above the transportation tariff being realised by GAIL," he said.

GAIL had on Tuesdaystated that "IPCL has not signed the revised Gas Supply Agreement with GAIL after the Government Pricing Order which came into effect from July 1, 2005," a ground enough to terminate gas supplies.

Officials said IPCL has contended that despite requests GAIL had not been able to furnish Government orders mandating it to collect marketing margin and had "unfairly" issued the termination notice.

"APM gas has been allocated to the consumers by the Government and GAIL has been performing the function of a transporter. The activities of transportation and marketing are not separate," a ministry note said. MORE

"However, for the gas which GAIL is selling outside the administered price mechanism, GAIL is already charging a marketing margin," it said.

IPCL contends that GAIL should not charge additional marketing margin over and above the transportation tariff.

The price of APM gas is administered by the Government, which was recently revised with effect from July 1, 2005. As per the pricing order, the price of APM gas had been fixed at Rs 3,200 per thousand cubic metres and transportation charges of Rs 1,150 per thousand cubic metres.

The price of about 6 million standard cubic metres per day of gas from Panna/Mukta and Tapti fields, which was being procured by GAIL for supply to power and fertilizer sector, had been pegged at 3.86 dollars per million British thermal unit (about Rs 7,050 per thousand cubic metres).

"The Gas Pricing Order does not provide for any marketing margin over and above the transportation tariff being realised by GAIL," the ministry note added.