Monday 24 July 2017

Is GAIL exploiting its monopoly powers with its customers: The truth will be out soon

There have always been allegations that GAIL uses its monopoly powers to exploit its customers.
The source of this power emanates from the fact that it is both a monopoly pipeline owner as well as a marketer of gas.The allegations, however, have never been entirely proved but a comprehensive investigation by the Competition Commission will soon nail the truth once and for all.
GAIL's claim has always been that back to back obligations force an onward imposition of Take or Pay (ToP) conditionalities on customers and its conduct has never been one where it abuses its monopoly supplier status.

The Commission is now going to dig up all the relevant information needed to either prove or disprove GAIL's claim, by looking into:

The different sources of gas procurement by GAIL and the nature of arrangements with each supplier including price and ToP liability under each such arrangement. Whether the gas supplied to the customers is supplied from a commingled stream, in which case, what is the basis for price determination/ revision from time to time. Whether ToP liabilities are always imposed on GAIL by its upstream suppliers which are then passed on to customers

Whether GAIL suffers losses, as it claims it does, on account of non off-take or under-drawl of gas by its contracted customers. What were the total ToP liabilities levied by the GAIL on all its customers located across India in recent years. Whether GAIL has indeed adopted any discriminatory practice in the imposition of ToP liability across its customer base.

Whether GAIL imposed full ToP liability only in cases where the concerned buyer contested the legality of the ToP claim or resorted to litigation or arbitration proceedings Details of policy, if any, of GAIL regarding the imposition of different liability upon different classes of customers. 

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