 "GAIL")
State-owned Gail India on Friday said it has initiated legal proceedings against an arm of the Russian energy giant Gazprom for non-delivery of LNG.
The company's chairman and managing director SK Gupta said Gail is seeking damages from Gazprom, but declined to spell out the amount being pressed for.
It has filed for arbitration in London and also appointed an arbitrator, Gupta said, adding that Gazprom is yet to appoint its representative.
A September 2022 news report said the central government is looking at the issue on a bilateral basis and was against pursuing arbitration or seeking any damages.
"...we are taking up legally against them to press for specific performance and to claim the damages. And our request for arbitration has been filed in a London arbitration court," Gupta told reporters here.
Also Read
He explained that the supply of Liquified Natural Gas had stopped in the aftermath of the Russian invasion of Ukraine and the sanctions imposed on the Vladimir Putin-led country by the West.
Gail had a tie-up with a German subsidiary of Gazprom, and a step-down company based in Singapore to supply the gas. After the invasion, the German government took over the company and the supplies got hindered as the German government debarred the company from picking up any cargo from Russia, Gupta said, stressing that this was a portfolio contract, and supplies cannot be stopped this way.
"...this was a portfolio contract, but perhaps as per their arrangement, the supplies were perhaps to come from Russia. And that is why this problem arose," he said, adding that the onus was on the suppliers to arrange for the cargo from other destinations.
Gupta reiterated that the normal supplies have resumed over the last two months, and hoped that the same will continue.
However, in a double whammy of sorts, Gail is paying higher than the current spot price for the supplies because its pricing contract pegs the price at an average of the last nine months, Gupta said.
GAIL had in 2012 signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023.
GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania, now called Sefe. But in early April last year, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions.
This followed the West slapping sanctions on Russia for its February 24 invasion of Ukraine. It invoked force majeure and stopped supplies to India from June 2022.
Gupta said on Friday that the force majeure clause is not acceptable to Gail.
Meanwhile, he said, Gail India plans to borrow up to Rs 7,000 crore in FY24 to fund the Rs 10,000 crore capital expenditure plan it has.
He added that even though FY23 was not good for internal resource generation, it invested Rs 9,100 crore, which was 15 per cent higher than the budgeted levels.
He exuded confidence that FY24 will be robust on the internal resource generation front and there will not be any problem in continuing with the capex.
The company's director of finance RK Jain said that given the present scenario in global finance, the borrowing will be done domestically and not in global markets.
Keeping in line with the Sebi mandate, a fourth of the borrowings will be in bonds, while the rest will be bank borrowings, he said.
At present, the company's overall long-term debt stands at Rs 9,800 crore, and the new bank borrowings will be for a tenor of over five years.
It is in the domestic market to raise a borrowing of Rs 1,500 crore right now, he added.
Gupta also said that the company is looking seriously at entering the solar energy components space, and will be looking at all the options, including tie-ups.
It is also confident of commissioning a green hydrogen production in the calendar year 2023 itself.
The company is also contemplating entering into the ethane cracker, but the plans are still on the drawing board.
Gupta said it will not be looking at pipeline monetisation because oil and gas companies are able to raise necessary resources from the markets.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
