GAIL in Rs145cr legal row with GNFC

Vol 18, PW 24 (30 Jul 15) News in Brief

A final hearing is scheduled on September 14 in the Gujarat High Court case where state-owned Gujarat Narmada Fertilisers Corporation (GNFC) has challenged a GAIL notice demanding Rs145cr ($23m).

GAIL's demand relates to gas supplied to the Bharuch GNFC plant from 2006-07 to 2008-09. GAIL claims GNFC used 200,000 cm/d of APM gas to produce non-urea fertilisers which are not a government priority.

GAIL believes GNFC should therefore pay the difference with full R-LNG rates for the gas retrospectively in line with a change in policy for gas utilisation to produce urea and non-urea fertilisers issued in July 2014. In January 2015, GNFC approached the Gujarat court after GAIL raised a demand of Rs50cr ($7.9m).

On April 29, 2015, GAIL issued a fresh notice to GNFC further increasing the amount to Rs145cr for the three year period. But the court on June 30, 2015 said GAIL needs to show clearly the gas was not used for the specified purpose.