Moily scanner on Petronet-Ras Laffan deal, orders fresh inquiry

Comes in the wake of allegations that there were discrepancies in the deal that led to loss of Rs 27,000 cr for the company

The ministry of petroleum and natural gas has ordered for a fresh inquiry into the gas supply deal between Petronet LNG Ltd (PLL) and Qatar-based Ras Laffan. This comes in the wake of allegations that said that there were “discrepancies” in the deal that led to a loss of Rs 27,000 crore for the company.

 

EAS Sarma, former power secretary, has written a letter to the Prime Minister seeking a CBI inquiry into the deal. 

“There has been a malpractice that has happened, either from the part of Petronet or from the Qatar company,” Sarma told Business Standard. Ras Laffan is a unit of Ras Gas, which is jointly owned by Qatar and Mobil in the ratio 70:30. However, the Petronet chief executive officer and Managing Director Ashok Kumar Balyan was not reachable for a comment.  

 

 

Though former petroleum minister Jaipal Reddy had ordered an inquiry into the deal, it yielded no result. According to a top ministry official, unsatisfied with the earlier enquiry, petroleum minister M Veerappa Moily has appointed a two-member inquiry team by the end of January this year.  “The team is supposed to come up with a report on this within two months, by April,” an official said.  

 

The contract provided Petronet to have the first right to pick up 5% stake in the LNG terminal in Qatar without any premium. For some inexplicable reason, Petronet desisted from exercising its right to the detriment of public interest, Sarma said in his letter to the PMO this week, a copy of which is with Business Standard.

 

According to him, the shortcomings in the contract forced Petronet to pay $12 per MMBTU for Qatar's LNG. This is much higher than $2.34 per MMBTU offered by Reliance to NTPC from the KG Basin and $4.20 per MMBTU, the price fixed by the government for the same gas. “The loss on this account has been estimated at $56 billion over the life of the contract,” the letter said.

 

As per the contract, Ras Laffan was supposed to supply 7.5 million tonne (MT) of rich liquefied natural gas, which contains higher hydrocarbons like propanes and butanes, in two tranches every year to enable India to utilise those higher hydrocarbons for producing petrochemicals. However, the global energy major has allegedly violated the contract and started supplying 2.5 MT of “lean” gas every year.

 

According to Sarma, when ADB tried to offload its 5.2% stake in Petronet, the ministry has offered it to the Qatar company. “The contract provides the first right to purchase the stake to the PSU equity partners in Petronet, like GAIL.” The other promoters of Petronet include ONGC, Indian Oil Corporation (IOCL) and Bharat Petroleum Corporation (BPCL).