Fair trade regulator rejects Tata Power's complaint against GAIL

The Competition Commission of India (CCI) has rejected a complaint by Tata Power against GAIL that alleged the state-owned firm abused its dominant position with regard to shipping of natural gas to the private firm's power plants.

Tata Power Delhi Distribution had complained to the fair trade regulator that GAIL was imposing unfair and unilateral conditions in the gas transportation agreements (GTA) by forcing the power company to bear 'ship-or-pay' charges, irrespective of the quantity of gas actually shipped.

In an order released on Thursday, CCI said that "no prima facie case of contravention of the provisions of the (Competition) Act is made out against the opposite party (GAIL)".

As per details in the order, Tata Power had been shipping an allocated quantity of natural gas "through upstream pipeline system of Reliance Gas Transportation Infrastructure and downstream pipeline system of GAIL".

However, because of a decrease in the supplies of natural gas from the KG-D6 gas field, an Empowered Group of Ministers (EGoM) took a decision regarding distribution of natural gas whereby the first priority was given to the fertiliser sector, followed by LPG consumers and then the power sector.

It had been stated that due to the EGoM's decision, the suppliers had reduced gas to Tata Power plant.

As a result of reduction in supply of gas, Tata Power was unable to ship the allotted quantity of gas through the gas pipelines for which GTAs were entered into. The agreements included provisions for imposition of fortnightly 'ship-or-pay' charges.

Tata Power had alleged that despite its repeated request to GAIL to relieve it from the obligation to pay the charges, it continued to levy such charges which was unjustified and in violation of CCI norms.

In its order, the fair trade regulator said, among others, that the norms by Petroleum and Natural Gas Regulatory Board had spelled out the "specific exclusions of the impugned charges in certain situations".

"One specific exclusion relates to quantities which have been reduced due to directions of Central/ State Government or any Government agency which is beyond the control of shipper and transporter," it said.

The regulator concluded that the GTA made suitable arrangements in respect of the eventuality such as those faced by the Tata Power in this case and hence the "agreement per se does not appear to be abusive".

"Needless to add, the Informant would be at liberty to pursue its remedies before appropriate forum against the opposite party if the latter does not adhere to contractual obligations and the extant regulatory provisions including the guidelines," it added.