GAIL set to lose MGL high court gas battle
Nearly a decade after the dispute began, Mumbai-based city gas retailer Mahanagar Gas (MGL) expects to emerge victorious in its fight against GAIL over gas transportation charges.
At stake is Rs331.80cr ($39.8m), which the PNGRB ordered MGL to pay GAIL on September 30 (2022). Justice Subramonium Prasad of the Delhi High Court will now hear the case on December 6 (2023).
"We have taken legal opinions, and we have a strong case," says a confident MGL source. In December 2022, MGL filed a petition in the Delhi High Court challenging the PNGRB order directing it to pay transportation charges to GAIL for ONGC gas from Uran.
On December 13 (2022), the high court stayed the PNGRB order but directed MGL to deposit Rs50cr ($6m) with GAIL by February 15 (2023). MGL deposited the amount with GAIL on February 14 (2023).
However, the dispute dates back to April 2014, when GAIL demanded the transportation charges from MGL for gas carried in the Uran to Trombay pipeline. GAIL's demand, in turn, followed an ONGC demand to GAIL based on a December 30 (2013) PNGRB order determining the tariff for the pipeline as a common carrier.
That order fixed the pipeline tariff at Rs5.70/mmbtu ($0.07), effective November 20 (2008). From April 1 (2018), PNGRB increased the tariff to Rs34.73/mmbtu ($0.42) and, effective April 1 (2023), slashed it to Rs13.89/mmbtu ($0.17).
"The total demand raised by GAIL from November 2008 till July 2021 is Rs331.80cr," we hear. However, MGL disputed the demand over several meetings, with GAIL citing contractual provisions.
MGL also pointed out that the transportation charges are to be paid by a third-party user to ONGC for using the pipeline as a common carrier and not for ONGC transporting its own gas. MGL first filed an appeal with the PNGRB in February 2015, dismissed in October 2015.
MGL then filed a writ petition in November 2015 with the Delhi High Court, which in November 2016 advised MGL to file an appeal with the Appellate Tribunal for Electricity (APTEL). APTEL sent the case back to the PNGRB on technical grounds in September 2019, and the PNGRB, in March 2020, ordered MGL and GAIL to pay the disputed transportation tariff to ONGC.