GAIL, VMC talks on gas bill inconclusive

Talks between GAIL India and the Vadodara Municipal Corporation (VMC) over payment of outstandings have not made much progress.

GAIL had taken over the supply of gas to VMC from ONGC. The civic body owed Rs 282 crore (Rs 35 crore as principle and the rest interest) to ONGC (and now to GAIL).

It may be noted here that GAIL had issued a notice to VMC, asking it to clear the outstanding payments before December 10, 2004. It had also threatened to discontinue gas supply to the city. VMC was told to pay Rs 282 crore, including Rs 35 crore as principal.

However, both parties have agreed to negotiate a deal. "Talks are still on with GAIL and no conclusion is visible yet. GAIL has asked VMC to pay the principal amount unpaid to ONGC for about ten years," said G P Joshi, commissioner of VMC.

It is believed that VMC is seeking reduction on the rate of interest GAIL has charged. GAIL has calculated the dues at a compounded interest rate of 18 per cent, while VMC is arguing it to be calculated at a simple rate.

Joshi avoided commenting on the ground on which the civic body is asking for the relaxation.

GAIL is the sole supplier of gas to VMC for its domestic gas supply network in Vadodara.

It is also learnt from VMC officials that GAIL is not moving to discontinue gas supply to the city.

It is also learnt that the proposal made by Gujarat Adani Energy Ltd (GAEL) to VMC for gas supply in the domestic market has not been considered yet. GAEL has a licence to supply gas in the Vadodara and Ahmedabad markets.