GSPL: Giving favours to Reliance and Torrent

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

When India’s Comptroller and Auditor General (CAG) speaks companies sit up and listen.

And so it is with GSPC stock market listed pipeline subsidiary Gujarat State Petronet, reprimanded by the national accounting watchdog in a report tabled in the Gujarat state assembly on April 1. CAG accuses Gujarat Petronet of leniency when dealing with Reliance and Torrent Power.

Under scrutiny in the 107-page report, seen by, is why GSPL allowed these companies to pay gas transportation charges in installments and waived interest payments against the orders of its own Board. In March 2013 Gujarat Petronet issued bills to Reliance for the period July 27, 2012 to February 15, 2013 for Rs83.59cr ($13m) and to Torrent for Rs31.88cr ($5m).

CAG asks why GSPL raised bills only from July 27, 2012 when a PNGRB order in September 2012 stated tariffs should apply from November 30, 2008. It seems GSPL bowed to pressure from Reliance which appealed against the PNGRB order in the Appellate Tribunal for Electricity (APTEL).

Worse GSPL in April 2013 allowed Reliance to repay what it owed in four installments ending on June 20, 2013 and allowed Torrent to pay two installments ending May 20, 2013. Surprisingly GSPL did not try to recover interest from Reliance or Torrent on their installment payments.

“Because of this," says CAG, "GSPL suffered a loss of Rs.1.71cr ($273,000) in interest.