Gujarat Petronet receives Rs1 lakh PNGRB fine

Vol 15, PW 24 (14 Jun 12) Midstream & Downstream
     

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Krishnan has a reputation for being a ‘softie’. But this month the gas regulator flexed his muscles with Gujarat State Petronet (GSPL).

On June 8, a PNGRB bench comprising chairman Krishnan and member legal YPC Dangay imposed a Rs100,000 ($1800) penalty on a GSPL-led consortium for failing to complete ‘financial closure’ for the 1611-km Mallavaram to Bhilwara pipeline by the January 3 deadline. GSPC managing director Tapan Ray, who led a nine-member consortium team to the hearing, must have imagined he was in a bad dream when the PNGRB also banned the consortium from participating in its tenders for a month.

Krishnan asserted that “regulations are sacrosanct” and the consortium must “show more diligence.” Yet he did approve a 180-day extension until July 3, 2012 to complete financial closure for the pipeline, originally authorised on July 7, 2011.

Egos are bruised at GSPL (52%) and partners IndianOil (26%), Hindustan Petroleum (11%) and Bharat Petroleum (11%). During the hearing, GSPC managing director Ray argued that delay to financial closure is the fault of old rival GAIL, which has filed a case with the Appellate Tribunal for Electricity (APTEL), questioning GSPL’s credentials to lay the pipeline.

As a result, a Bank of India-led consortium of 12 banks has only approved the disbursement of Rs2200cr ($394m) in loans. Yet these banks signed a Rs4516cr (807m) ‘rupee facility term loan agreement’ with GSPL on January 30.

Happily, the pending bank loan sanction letters are expected to come in by June 15. Ray also told Krishnan and Dangay that GSPL has completed 90% of the route survey for the pipeline along with the Environmental Impact Assessment.