Indraprastha Gas accused of profiteering on gas sales

Vol 12, PW 6 (07 Aug 08) People & Policy

Profiteering is not a word to be used lightly.

But that is the accusation levelled against BPCL and GAIL joint venture Indraprastha Gas (IGL), following an investigation by the country’s Monopolies and Restrictive Trade Practices (MRTP) Commission. According to a Preliminary Investigation Report (PIR), compiled by MRTP investigating officers, and seen by PETROWATCH, “IGL has been found guilty of engaging in monopolistic practices under Section 2 (I) (V) of the MRTP Act, 1969.

â€‌ In a striking illustration of how ordinary citizens can challenge big business, trouble for IGL began on September 3 last year when Virendra Kapoor from the Nizamuddin area of Delhi filed a complaint against IGL, accusing it of over-charging for piped cooking gas supplies to his kitchen. Kapoor’s central allegation was that IGL buys gas from GAIL at Rs5.06 per cubic metre but re-sells it to customers at Rs13.52 - pocketing a substantial Rs8.06 difference.

Commission officials, speaking to this report on condition of anonymity, were surprised at Kapoor’s detailed grasp of the facts. “The complainant (Kapoor) is an elderly gentleman,â€‌ confirms a MRTP source.

“But he must have done his homework because he has so much information on IGL we think he received help from someone within the company.â€‌ Kapoor rolls out figures from other gas retailers, mainly in Gujarat, and operating on narrower margins, to support the “profiteeringâ€‌ charge against IGL.

British Gas-controlled Gujarat Gas, for example, buys gas at Rs7.55 per cubic metre and sells it at Rs11.74 – a difference of Rs4.19 only, around half the Rs8.06 earned by IGL. Kapoor adds GSPC Gas and Adani Energy sell gas at Rs13.74 per cubic metre, while Mumbai-based Mahanagar Gas sells it at Rs11.82 per cubic metre.

“The point he is making is that other companies buy gas at a higher price but still sell cheaper or at the same price as IGL,â€‌ adds a source. “Why can’t IGL sell gas cheaperâ€‌

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