Andhra CM Reddy lobbies for $138m refund from GAIL

Vol 10, PW 16 (30 Nov 06) Midstream & Downstream

Asking for a refund of $138m from a state-owned company like GAIL is no easy task.

For it to have any impact you need support from the highest political levels. Luckily for the four power companies above they have Andhra Pradesh chief minister Dr.

YS Rajasekhara Reddy on their side. PETROWATCH learns Reddy is lobbying hard with Prime Minister Manmohan Singh for GAIL to refund the excess transportation tariff to the four power companies.

In a letter to Singh on 13th November, Reddy writes: Please refer to my letters dated 4th June, 30th June and 31st August 2006, requesting that the Tariff Commission recommendations on transportation charges for gas being supplied to power projects from KG Basin be implemented. Reddy stresses that the PMs office had agreed to set up a group at the Planning Commission to examine the issue.

On 30th October, adds Reddy, this group forcefully recommended that the Tariff Commission recommendations be implemented immediately, and that all over-payments received by GAIL in the past should be refunded immediately. Reddy is angry that, the Ministry of Petroleum and Natural Gas, although a participant in the meetings of the Group on 20th September, 24th and 30th October, have unilaterally issued a letter on 23rd October, effecting an upward tariff revision (See table in above story) vis--vis the tariff recommended by the Tariff Commission.

Reddy goes on to accuse the oil ministry of flouting the Tariff Commission and Planning Commission recommendation with its directive that the revision should be implemented with prospective effect only. He further accuses the oil ministry of making unilateral decisions and a lack of transparency and requests the PM to call a meeting of the Planning Commission, the Tariff Commission, the oil ministry and the Andhra Pradesh Chief Secretary.