Guj HC turns down GSPC's plea on pool price

The Gujarat High Court on Friday has turned down the plea by Gujarat State Petroleum Corporation Limited (GSPC) for cancellation of Central notification facilitating pool pricing of the regassified liquefied natural gas (RLNG). In a judgement, a three-judge bench comprising of Justice D A Mehta, Justice D N Patel and Justice J C Upadhyay ruled against GSPC's contention by 2-1.
Centre had issued a notification regarding pooling of prices. Following the notification GAIL had intimated this decision to all the concerned stakeholders. The notification had announced pooling price of long term liquefied natural gas landing at Petronet LNG Limited's Dahej facility with that of spot cargo landing there.
This meant that GAIL would sell LNG to its existing buyers as well as Ratnagiri Gas & Power (erstwhile Dabhol) project at an average price of spot LNG and contracted LNG price. This was opposed by GAIL's existing LNG buyers, GSPC in Gujarat High court and Essar Steel in Delhi High Court. Besides, many other state units as well as private gas companies filed litigations in various High Courts.
Justice D A Mehta struck down the notification facilitating pool pricing of the RLNG on the grounds that the notification was not in the interest of all the stakeholders but a single institution. Therefore, GSPC's petition seeking cancellation of Central notification should be allowed.
While turning down GSPC's plea, Justice D N Patel and Justice J C Upadhyay opined that public interests could be served through even a single institution. Earlier, the division bench comprising of chief justice Y R Meena and Justice Akil Kureshi had in their order differed on the issue whether to grant a stay on the central government's decision of pooling gas prices, on September 27, 2007.
In an order on September 27, 2007, Chief Justice Y R Meena had that Centre had a right to implement a new policy and since it was a policy decision, its legitimacy, even in light of fixed-price and fixed-term contract between GSPC and GAIL, cannot be disputed before the Gujarat High Court.
Hence, court cannot entertain the state government corporation's plea to issue a stay on the Centre's decision of pooling gas prices.
Justice Akil Kureshi in his order then stated that the court may grant a stay on pooling of gas prices, because the decision affects end users who fall in chain of long term contract.
He opined that since the promise was broken, there should be an arrangement between GSPC and GAIL and others in a way of providing security for the loss being borne by recipient of gas. Hence, a stay should be granted on new pricing mechanism which tends to incur a loss of Rs 300 crore for GSPC.
BS Reporter / Ahmedabad May 16, 2008, 20:06 IST
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