Indian Oil 'scared' to pay Skoda the money agreed

Vol 4, PW 23 (20 Dec 00) Midstream & Downstream

Skoda Export of the Czech Republic is still waiting for its money from Indian Oil Corporation! In September we reported that a dispute between Skodaand Indian Oil over compensation for construction of the Kandla-Bhatinda pipeline was drawing to a close.

Did we speak to soon This report understands that Indian Oil has agreed to pay Skoda an estimated Rs225cr ($49m) following the recommendations of an 'Audit Committee', but that it is too scared to take a unilateral decision and make payment! Last month, IOC's board reaffirmed its acceptance of the out-of-court settlement but only on condition it is approved by oil minister Ram Naik and a 'Vigilance Cell', which monitors allegations of corruption. But Naik refuses to be drawn into the dispute.

More, he has scolded IOC for not having the courage to act on its own recommendation. Naik is telling IOC it is a 'Navratna' (a 'Crown Jewel' company) and should take decisions on its own without seeking ministry approval.

Navratnas have functional autonomy, in theory. In truth, this status is given only when officials want to distance themselves from controversial issues like this where allegations of corruption are swirling around.

In November 1996, Skoda filed for arbitration after IOC encashed its bank guarantee worth Rs 158.64cr ($35m) for delay in fitting the SCADA (Supervisory Control and Data Acquisition System) for the 1,331-km product pipeline.