Supreme Court’s decision came on an appeal filed by TPDDL against a September order by the Delhi high court declaring a part of the PNGRB (development of model gas transportation agreement) guidelines, 2012, as not being in accordance with the law. Photo: Mint
Supreme Court’s decision came on an appeal filed by TPDDL against a September order by the Delhi high court declaring a part of the PNGRB (development of model gas transportation agreement) guidelines, 2012, as not being in accordance with the law. Photo: Mint

SC restrains PNGRB from passing final order in Tata Power-GAIL dispute

The dispute arose out of GTAs that GAIL had entered into with the power companies for transportation of their gas through its pipelines

New Delhi: The Supreme Court on Friday restrained the petroleum and natural gas regulatory board (PNGRB) from passing a final order in a dispute involving Tata Power Delhi Distribution Ltd (TPDDL), GAIL (India) Ltd, Lanco Kondapalli Power Ltd, GMR Energy Ltd and GMR Vemagiri Power Generation Ltd.

The direction came on an appeal filed by TPDDL against a September order by the Delhi high court declaring a part of the PNGRB (development of model gas transportation agreement) guidelines, 2012, as not being in accordance with the law.

The dispute arose out of gas transportation agreements (GTAs) that GAIL had entered into with the power companies for transportation of their gas through its pipelines.

These agreements contain a clause which requires that the shippers pay minimum transportation charges amounting to 95% of the allocated quantity of gas to GAIL irrespective of whether they ship the entire quantity of gas that is allocated to them or only a part of it.

Consequently, even when GAIL is not carrying any gas for the shippers, they will be liable to pay 95% of the transportation charges to GAIL.

The shippers argued such a requirement was not in consonance with the Model GTA Guidelines since they provide that the shippers do not have to pay these charges if they are unable to transport the allocated quantity for reasons beyond their control, like in this case where owing to the fall in gas production from the KG-D6 offshore basin, the government had reduced the entitlement of shippers to gas.

TPDDL is asking the Supreme Court to hold that the guidelines framed by the PNGRB are in compliance with the law.

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