KEI-RSOS fined Rs1.8cr for gas pipeline delay

Vol 19, PW 12 (25 Feb 16) Midstream & Downstream

Enough is enough.

That's the stark message from the PNGRB to Andhra Pradesh-based KEI-RSOS over its failure to prove Financial Closure or secure a Gas Transmission Agreement (GTA) for a proposed gas pipeline from Ennore in Tamil Nadu Nellore in Andhra Pradesh. In a harshly worded ruling on February 17 the gas regulator announced it had encashed Rs1.8cr or 25% of the company's Rs7.3cr ($1.06m) Performance Bank Guarantee and ordered it to make up the shortfall by March 2.

"Bank guarantees are always kept at a 100%," says a source. "If 25% is encashed then the defaulting party must pay the difference to 100%." In a four-page ruling members PK Bishnoi, KK Jha, Subhash Chandra and Dr.

B. Mohanty accuse KEI-RSOS of a systematic failure to meet repeated deadlines to prove Financial Closure or a GTA for the estimated Rs625cr ($91m) pipeline.

The most recent deadline was November 30, 2015. They also express grave doubts about the financial strength of KEI-RSOS to execute the pipeline project or a parallel LNG import project promoted by sister company LNG Bharat.

"The proposed (5m t/y) LNG FSRU," says the order, "does not appear among upcoming terminals reported by the (oil ministry) Petroleum Planning & Analysis Cell (PPAC) even though it is scheduled to be commissioned by December 2016 as claimed." Contacted by this report, KEI-RSOS said it is consulting its legal team.