The Delhi High court on Wednesday issued a stay on an order issued in November by the Petroleum and Natural Gas Regulation Board for “virtual transport” of Liquified Natural Gas from the west coast to east coast in a swapping transaction between Reliance Gas Transportation Infrastructure Ltd (RGTIL) and GMR Energy Ltd.
The PNGRB had directed RGTIL to ensure within 40 days that GMR Energy got access to its pipeline for transportation of natural gas from west coast to its power plant in Andhra Pradesh.
The orders were issued on a plea by the Fertilizer Association of India (FAI), which alleged that PNGRB order was against the guidelines of swapping transactions issued by the petroleum ministry in 2011, and the “national policy for supply of gas.’
The PNGRB order had allowed swapping of gas supply between the Kakinada based RGTIL plant and the west coast-based GMR plants. The order came under the provisions of PNGRB Regulations, 2008. GMR Energy had filed a complaint that RGTIL, operating a common pipeline, was not providing it open access to transport natural gas. The order would have had the effect of “virtually transporting RLNG from west coast to east coast customers by physically delivering KD-D6 gas to customers in the state and RLNG to customers outside the state.
However, the FAI objected stating that the swap would imply that fertiliser plants in the west coast would have to pay the 14.5 per cent VAT charged by Andhra Pradesh since the transaction would be counted as a sale within the state. The FAI has demanded that the additional tax burden should be placed on private parties as they were the beneficiaries of the transaction.