Victory for MGL in 'complex' PNGRB dispute

Vol 24, PW 18 (29 Jul 21) Midstream, Downstream, Renewables

Mahanagar Gas (MGL) has won a case against the PNGRB over transportation charges to GAIL for ONGC gas.

"This is an interesting case because of the multiple players involved," says an MGL source. "We need more clarity from the downstream regulator where more than one company is involved in gas transmission."

On July 16 (2021), the Appellate Tribunal for Electricity (APTEL) chair Justice Manjula Chellur and member technical Ashutosh Karnatak issued a 35-page order quashing a PNGRB order dated March 18 (2020), forcing MGL to pay transportation charges. Chellur and Karnatak's ruling followed an appeal by MGL on March 20 (2020) after noting that member legal SS Chahar, who retired a day earlier on March 19 (2020), failed to sign it.

"Chahar neither signed the order nor dissented from it," adds MGL. Before May (2020), any PNGRB order needed a signature from the member legal to be valid.

However, in May (2020), former PNGRB chairman DK Sarraf decreed that the PNGRB needed only two members for a "quorum’ to give orders or judgements. In dispute were GAIL's transportation charges for taking ONGC gas from its Mumbai offshore fields to Trombay through the ONGC-owned and operated Uran to Trombay pipeline.

From Trombay, GAIL supplies the gas through its pipeline to MGL’s city gate station at Wadala in Mumbai. On April 24 (2020), GAIL demanded Rs250cr ($33.5m) from MGL within 14 days, failing which it said it would encash an Rs100cr ($13.4m) Letter of Credit (LoC).

But APTEL quashed the PNGRB order and questioned whether MGL should pay transportation charges. Under their Gas Supply Agreement (GSA) dated July 7 (2006), ONGC and GAIL agreed the gas 'custody transfer point' would be Trombay, not Mumbai High.

In theory, that would make MGL responsible for gas transportation charges from Trombay onwards; ONGC's responsibility is to transport gas to that point only. But APTEL wants the PNGRB to take a final decision.

"Hopefully, the PNGRB will hear the matter again with a fresh mind," we hear. "New members might bring a fresh perspective."