Vendetta? Baalu got NDA to cut gas supply fee

Vendetta? Baalu got NDA to cut gas supply fee

AMITAV RANJAN

Posted online: Thursday, May 01, 2008 at 0039 hrs IST

New Delhi, April 30
All along, at the centre of a political controversy, Union Minister T R Baalu has claimed that gas allocation was cancelled to his son’s firm King Power by the NDA government because of political vendetta. Official records, however, contradict Baalu’s version — a fact that Petroleum Minister Murli Deora glossed over as well when he defended Baalu in Parliament.

According to a status report from GAIL (India) Ltd, not only did Baalu ask for a cut in gas transportation cost, he even got it reduced. But he still did not sign the contract although GAIL kept sending reminders — until it lapsed.

In the much-awaited report sought by the Prime Minister’s Office, GAIL says it “vigorously pursued” with King India Power Corp (KIPC) to sign the transportation contract for the 0.45 million standard cubic metres of gas per day allotted to it.

“However, in spite of our repeated reminders, the party did not come forward to sign the contract and in January 2004, the Ministry of Petroleum & Natural Gas conveyed that the allocation has lapsed,” says the report signed by GAIL’s General Manager (Gas Marketing) N S Parthasarthy.

The sequence of events (see box) makes it clear that KIPC was informed in August 1999 that it would be charged Rs 654 as transport tariff for every thousand cubic metres (TCM) of gas. But Baalu’s firm sought parity with Kovilkalapal plant of Tamil Nadu Electricity Board (TNEB) which was paying Rs 250 per TCM.

In a meeting with KIPC in December 1999, GAIL explained that TNEB’s charge was lower as it is serviced by a 9-km pipeline of 8-inch diameter while for KPIC’s 105 MW plant, GAIL needed to lay a 42-km pipeline of 14-inch diameter.

However, on the Minister’s insistence, this tariff was lowered to Rs 497 per TCM for KIPC in November 2000 only to be raised exactly three years later — when Baalu was still a Cabinet minister in the NDA coalition — to Rs 750 per TCM because of higher steel prices and other related costs.

“As such the contention that GAIL has not communicated the price of gas is not correct and as a matter of fact, King India was in full knowledge of the total price since this was administered price gas and transmission charges were indicated as far back as August 1999,” says the GAIL letter.

Earlier this month, KIPC wrote to the Ministry that since “no reply was forthcoming” from GAIL on transport tariff, it “could not arrive at the financial workings and were unable to prepare the detailed project report for financing the project”.

It termed the gas cancellation an “arbitrary and illegal action” by the NDA government and GAIL who had malafide intention to “wreak vengeance” because KIPC Managing Director was son of T R Baalu who had quit the NDA in December 2003.

Baalu, whose DMK party dumped the BJP-led NDA coalition, came back into government as an ally of the Congress-led UPA. Now the Surface Transport Minister has been pulling strings for his son’s firms while son Selva Baalu has been writing to ministry and the PMO for restoration of gas linkage.

But GAIL is very clear that there is no natural gas for KIPC. “In this context, we also refer to the availability and allocation of gas. It could be seen that there is no surplus APM gas available in any of the zones in Cauvery Basin,” it writes.

3 yrs, Baalu sat on contract

•June 1999: King India (KIPC) allotted 0.45 MSCMD of gas

•Aug 1999: GAIL informs KIPC transport charge to be Rs 654 per TCM

•Nov 1999: KIPC seeks cut

•Nov 2000: GAIL cuts charge to Rs 497 per TCM

•April 2002: Ministry extends gas linkage validity until June 2002. GAIL sends reminders

•Nov 2003: GAIL raises charge to Rs 750 per TCM

•Feb 2004: KIPC doesn’t sign, allocation lapses

	Print Story
Vendetta? Baalu got NDA to cut gas supply fee AMITAV RANJAN Posted online: Thursday, May 01, 2008 at 0039 hrs IST New Delhi, April 30 All along, at the centre of a political controversy, Union Minister T R Baalu has claimed that gas allocation was cancelled to his son’s firm King Power by the NDA government because of political vendetta. Official records, however, contradict Baalu’s version — a fact that Petroleum Minister Murli Deora glossed over as well when he defended Baalu in Parliament. According to a status report from GAIL (India) Ltd, not only did Baalu ask for a cut in gas transportation cost, he even got it reduced. But he still did not sign the contract although GAIL kept sending reminders — until it lapsed. In the much-awaited report sought by the Prime Minister’s Office, GAIL says it “vigorously pursued” with King India Power Corp (KIPC) to sign the transportation contract for the 0.45 million standard cubic metres of gas per day allotted to it. “However, in spite of our repeated reminders, the party did not come forward to sign the contract and in January 2004, the Ministry of Petroleum & Natural Gas conveyed that the allocation has lapsed,” says the report signed by GAIL’s General Manager (Gas Marketing) N S Parthasarthy. The sequence of events (see box) makes it clear that KIPC was informed in August 1999 that it would be charged Rs 654 as transport tariff for every thousand cubic metres (TCM) of gas. But Baalu’s firm sought parity with Kovilkalapal plant of Tamil Nadu Electricity Board (TNEB) which was paying Rs 250 per TCM. In a meeting with KIPC in December 1999, GAIL explained that TNEB’s charge was lower as it is serviced by a 9-km pipeline of 8-inch diameter while for KPIC’s 105 MW plant, GAIL needed to lay a 42-km pipeline of 14-inch diameter. However, on the Minister’s insistence, this tariff was lowered to Rs 497 per TCM for KIPC in November 2000 only to be raised exactly three years later — when Baalu was still a Cabinet minister in the NDA coalition — to Rs 750 per TCM because of higher steel prices and other related costs. “As such the contention that GAIL has not communicated the price of gas is not correct and as a matter of fact, King India was in full knowledge of the total price since this was administered price gas and transmission charges were indicated as far back as August 1999,” says the GAIL letter. Earlier this month, KIPC wrote to the Ministry that since “no reply was forthcoming” from GAIL on transport tariff, it “could not arrive at the financial workings and were unable to prepare the detailed project report for financing the project”. It termed the gas cancellation an “arbitrary and illegal action” by the NDA government and GAIL who had malafide intention to “wreak vengeance” because KIPC Managing Director was son of T R Baalu who had quit the NDA in December 2003. Baalu, whose DMK party dumped the BJP-led NDA coalition, came back into government as an ally of the Congress-led UPA. Now the Surface Transport Minister has been pulling strings for his son’s firms while son Selva Baalu has been writing to ministry and the PMO for restoration of gas linkage. But GAIL is very clear that there is no natural gas for KIPC. “In this context, we also refer to the availability and allocation of gas. It could be seen that there is no surplus APM gas available in any of the zones in Cauvery Basin,” it writes. 3 yrs, Baalu sat on contract •June 1999: King India (KIPC) allotted 0.45 MSCMD of gas •Aug 1999: GAIL informs KIPC transport charge to be Rs 654 per TCM •Nov 1999: KIPC seeks cut •Nov 2000: GAIL cuts charge to Rs 497 per TCM •April 2002: Ministry extends gas linkage validity until June 2002. GAIL sends reminders •Nov 2003: GAIL raises charge to Rs 750 per TCM •Feb 2004: KIPC doesn’t sign, allocation lapses