GSPC's petition on Gas prices referred to third Judge

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Ahmedabad, Sep 28 (UNI) In view of difference of opinion between Chief Justice of Gujarat High Court Y R Meena and senior most Judge Akil Qureshi, the High court has decided to refer the petition of Gujarat State Petroleum Corporation's (GSPC) for cancellation of Central Government's notification on ''pool pricing of R-LNG'' to the third Judge and his decision will be binding on all parties.

The Chief Justice will nominate the third Judge next week, who will look into aruguments placed before the two-member bench by the Central government, Maharashtra Electricity Board, GSPC, GAIL and other parties.

The GSPC, a Gujarat Government's Oil and Gas company, had sought a stay over implementation of the gas pool pricing mechanism. The company is buying R-LNG from Petronet LNG Limited (PLL) and selling to large number of industries as well as in the form of CNG for fuelling the transport sector.

The disputes between GSPC and PLL arose following the Central Government decision to introduce pool pricing mechanism for R-LNG, which in turn resulted in increase in prices of gas sold to GSPC.

The pool pricing mechanism was introduced to reduce the cost of gas to Dabhol power project.

A division bench of Chief Justice Meena and Justice Qureshi had noted there is a provision of arbitration in the contract itself, which was entered into by GSPC and GAIL. However, The Chief Justice had said the judiciary had no role for intervention and there was no need to grant stay for implementation the pool pricing mechanism.

But, Justice Qureshi held different views and said while granting stay, safeguards should be incorporated.

GSPC had contended before the court that central government oil companies had entered a long term contract for buying gas and it was valid till December 2008. The Centre has claimed that GSPC had no locus standi for challenging the pool price mechanism, since it's a mere trader and the burden would have to be borne by the end users that is the consumer.

GSPC had also been objecting to the Centre and Maharashtra's contention that the matter is fit for arbitration and it cannot be decided by a court of law. The state government along with GSPC, however, claims that its reservation is primarily against the pooling of gas prices, which affects a fixed-rate contract.

The Central government, which is keen to start the Dabhol power projects, early this year had decided to import gas at higher prices to fuel the Power project. It had also decided to pool the prices and as a result, Gas prices for GSPC increased to over 5.86 dollar per MMBtU. The import price of new gas is around nine dollars per MMBtU.

GSPC moved the High Court in July and the court granted stay for implementation of the pool pricing mechanism. The Central Government moved an application against the Gujarat High Court order and the apex court had lifted stay and directed the High court to hear the GSPC application.


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