SC issues notices to oil & gas regulator on GAIL's plea

The Supreme Court on Thursday issued notice Petroleum and Natural Gas Regulatory Board (PNGRB) to over a plea filed by state-run gas utility firm GAIL against the petroleum and gas sector regulator for issuing licence to Gujarat State Petronet (GSP) for Rs 5,000 crore Mehasana Bahatinda Natural Gas Pipelines (MBPL).

GAIL has alleged that PNGRB issued licence to GSP in an arbitrary and illegal manner, violating its interim direction that all such decisions should be done by a multi-member board and not by its Chairman's nominee.

Admitting GAIL's application, a vacation bench of Justice B S Chauhan and Justice Swatanter Kumar issued notice to the PNGRB directing it to file a reply within two weeks.

It also gave GAIL one week time to file its rejoinder over the reply filed by the board in this matter.

Meanwhile, the bench also clarified that the status of MBPL would be subject to the outcome of its final order.

The apex court had on May 12 passed an interim order, allowing the PNGRB to process all pending applications for the grant of licences to retail CNG to automobiles and piped gas to homes, with a rider that a multi-member board should take all such decisions.

However, GAIL in its petition filed through its counsel Ajit Pudussery alleged that decision taken by GAIL was "in direct contravention of the order passed by Supreme Court".

"It is evident that neither the Member Technical not the Member, Commercial could have participated in the meeting and hence the decision taken is liable to struck down," said GAIL.

It further said that decision was taken by "certain officers of the board with the approval of the Chairman".

In its interim order of May 12, the apex court had asked PNGRB Member, Infrastructure B S Negi not to participate in any meeting of the board granting authorisation for city gas distribution and cross-country pipelines, as there was serious allegations of impropriety against him.

Its Member, Commercial has demitted office in November 2010 and the post is lying vacant since.

GAIL further alleged that the board by "illegally reserving to itself the power to issue modifications to the tender" issued large number of clarifications and amendments and showed undue haste.

In its plea to quash the approval granted to GSPL, GAIL has requested the apex court to "issue direction to calling records of PNGRB pertaining to issue of letter of intent of May 18, 2011 for MBPL".

The PSU has submitted that PNGRB's going ahead with pipe line project will cost the exchequer heavily at an estimated Rs 5,000 crore when with just about 10 per cent of the said expenditure GAIL could extend its existing piplines to the concerned areas in a shorter time frame.

The PNGRB had issued Letter of Intent to GSPL on May 18 this year for MBPL for which GAIL had also bid.

GSPL is a subsidiary of Gujarat State Petroleum Corp -- the country's only oil company promoted by a state government