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GAIL's 5.8 MMTPA US LNG offtake obligation-III: Is it time to take some action?
Feb 22:
It is time for the government to act against the GAIL brass for its various acts of commission and omission in the conduct of the company's affairs.
8To begin with, there is no reason why the GAIL brass should not be punished for the pipeline blast that killed 22 people in their sleep on June 27, 2014.
8The GAIL management was found directly responsible both by the OISD and the PNGRB for gross lapses and dereliction of duty.
8Under the eyes of the law, this amounts to criminal conduct, tantamount to culpable homicide and there is a need for immediate action against the culprits.
8But clearly the authorities are looking the other way.
8The PNGRB has refused to invoke stricter provisions enshrined in the PNGRB Act for willful misbehavior that led to the blast. It has capitulated to the pressure and clout of the gas major to settle for a light rap on the knuckles by imposing a fine of mere Rs 20 lakh.
8In what is a blatant act of immorality, and perhaps safe in its assumption that it will be shielded by the powers that be, the GAIL management had at one point even gone ahead and challenged the imposition of the token fine on legal points.
8In the US, such incidents would have resulted in not just imprisonment of the management but also fines worth billions of dollars.
8A full investigation is also needed into the decision making process that lead to the booking of 5.8 MMTPA of LNG capacity in the US with a recurring yearly liability in fixed charges. In a grossly over supplied market at a time when the US obligations kick in, it is doubtful if GAIL will make a profit on this commitment for a long time to come
8Some would argue that it was a business decision that has gone wrong but nevertheless the file notings require investigation to check for inconsistencies and malafide intention.
8There are always many wheels within wheels in such billion dollar decisions.
8It is also time for the government to give up its resistance to the PNGRB's suggestion to split up GAIL into transmission and trading entities. There is too much of a conflict of interest between the two and this is only impeding and not promoting the gas business in India. As its many consumers will vouch, GAIL is not a company greatly known for its ethics. Years of abuse of its monopoly position has led to an entrenched mindset that is out of tune with the changing times.
8The government had defended GAIL's monopoly so far on the assumption that no other company would come forward to fulfill the obligation of creating a gas pipeline infrastructure but this assumption is false. For GAIL would not move to lay a pipeline if it did not see profit at the end of the line. The fact that it delayed several key pipelines on account of lack of anchor customers and positive NPV is proof enough. Eventually the gas major had to be goaded to move forward with significant viability gap funding from the government of India.
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8To begin with, there is no reason why the GAIL brass should not be punished for the pipeline blast that killed 22 people in their sleep on June 27, 2014.
8The GAIL management was found directly responsible both by the OISD and the PNGRB for gross lapses and dereliction of duty.
8Under the eyes of the law, this amounts to criminal conduct, tantamount to culpable homicide and there is a need for immediate action against the culprits.
8But clearly the authorities are looking the other way.
8The PNGRB has refused to invoke stricter provisions enshrined in the PNGRB Act for willful misbehavior that led to the blast. It has capitulated to the pressure and clout of the gas major to settle for a light rap on the knuckles by imposing a fine of mere Rs 20 lakh.
8In what is a blatant act of immorality, and perhaps safe in its assumption that it will be shielded by the powers that be, the GAIL management had at one point even gone ahead and challenged the imposition of the token fine on legal points.
8In the US, such incidents would have resulted in not just imprisonment of the management but also fines worth billions of dollars.
8A full investigation is also needed into the decision making process that lead to the booking of 5.8 MMTPA of LNG capacity in the US with a recurring yearly liability in fixed charges. In a grossly over supplied market at a time when the US obligations kick in, it is doubtful if GAIL will make a profit on this commitment for a long time to come
8Some would argue that it was a business decision that has gone wrong but nevertheless the file notings require investigation to check for inconsistencies and malafide intention.
8There are always many wheels within wheels in such billion dollar decisions.
8It is also time for the government to give up its resistance to the PNGRB's suggestion to split up GAIL into transmission and trading entities. There is too much of a conflict of interest between the two and this is only impeding and not promoting the gas business in India. As its many consumers will vouch, GAIL is not a company greatly known for its ethics. Years of abuse of its monopoly position has led to an entrenched mindset that is out of tune with the changing times.
8The government had defended GAIL's monopoly so far on the assumption that no other company would come forward to fulfill the obligation of creating a gas pipeline infrastructure but this assumption is false. For GAIL would not move to lay a pipeline if it did not see profit at the end of the line. The fact that it delayed several key pipelines on account of lack of anchor customers and positive NPV is proof enough. Eventually the gas major had to be goaded to move forward with significant viability gap funding from the government of India.
Click on Details for more
