VMC in parleys with GAIL for sops on dues

The Vadodara Municipal Corporation (VMC) is in talks with GAIL India, the present gas supplier to the city, to reduce the interest rate on its outstandings.

On November 24 GAIL had issued a notice to VMC, asking it to make all outstanding payments before December 10 or it would discontinue gas supply to the city. VMC was told to pay Rs 282 crore, including a Rs 35 crore principal amount. This amount also includes the corporation's dues to the Oil and Natural Gas Corporation (ONGC), which was the earlier supplier to Vadodara.

Gas supply remained uninterrupted in Vadodara on Monday.

At present VMC officials are in talks with GAIL and ONGC officials to reconsider the outstanding amount.

"There is not much development on the issue. We are negotiating with all concerned authorities to reconsider the outstandings. As of today gas supply is on and we are trying to reach at a consensus in the best interests of the people and concerned agencies," said G P Joshi, municipal commissioner of Vadodara.

VMC officials are upset over the interest rates at which GAIL has calculated the outstanding amount (a compound interest rate of 18 per cent for the last 30 years).

VMC opines that a reasonable simple rate could have been affordable for the cash-strapped civic body.

GAIL is the sole gas supplier to Vadodara with about 71,000 domestic gas connections and a billing of 18 crore in the last fiscal.

Meanwhile, the VMC is also considering an offer made by the Gujarat Adani Energy Ltd (GAEL) to take over the existing gas distribution network in Vadodara city. GAEL, which has been awarded gas distribution rights in Vadodara, had asked VMC to evaluate the gas pipeline network of the city.