MGL: Fighting GAIL/ONGC over Rs75.44cr charges

Vol 18, PW 16 (09 Apr 15) Midstream, Downstream, Renewables

Mahanagar Gas (MGL) is challenging claims by ONGC and GAIL that it owes them Rs75.44cr ($12.6m) in unpaid gas transportation charges.

"Everywhere in India gas transportation from the field to the custody transfer point is the gas producer's responsibility not the customer's," MGL tells us. "Transportation costs are built into the gas price."

MGL first filed a case against ONGC and GAIL with the PNGRB in February. Shortly after on March 4, PNGRB chairperson S.

Krishnan and fellow Board members issued an 'interim order' saying GAIL should not "take any coercive step to enforce payment of this amount" until further notice. For its part MGL was given a month to provide a Letter of Credit (LC) proving it could pay, if required.

ONGC claims the amount as 'common carrier' charges for the use of its pipeline to transport Mumbai High gas to Trombay from where GAIL supplies it to MGL, its retail gas JV with UK-based British Gas. ONGC is demanding the amount from GAIL which in turn is claiming it from MGL.

But MGL says the demand is unjustified and unprecedented. Another problem is that ONGC is backdating the claim to 2008 in line with PNGRB regulations but MGL says even if ONGC's claim, made in 2014, is justified, which it disputes, none of its customers will pay backdated charges stretching back seven years.