HC Stays ONGC Tender, E-auction Of Natural Gas From KG-basin Till June 4

The Delhi High Court has put on hold state-run ONGC's notice inviting tender (NIT) and the consequent e-auction with regard to sale of natural gas from its block in the Krishna-Godavari (KG) basin in Kakinada, Andhra Pradesh.

A bench of Chief Justice D N Patel and Justice Jyoti Singh said a prima facie case is made out in favour of the petitioners -- two GMR group companies -- and balance of convenience was also in their favour, as finalisation of the bidding would cause irreparable loss to them.

"We, therefore, stay the operation, implementation, execution and finalization of the NIT dated April 12, 2021 as well as corrigendum to the NIT issued on April 27, 2021 and the consequent e-auction, till the next date of hearing," the bench said in its May 20 order.

With the observation the court listed on June 4 the pleas by GMR Vemagiri Power Generation Ltd and GMR Rajamundhry Energy Ltd challenging the NIT and seeking a stay on any new allocation or allotment of gas from the KG-basin of Oil and Natural Gas Corporation (ONGC).

Under the April 12 NIT, ONGC had invited bids in respect of 2.0 Million Metric Standard Cubic Meter per Day (MMSCMD) of gas from its KG-basin in Kakinada, Andhra Pradesh.

The companies have sought a stay on any further allocation on the ground that the Centre and ONGC failed to deliver the gas allocation assured to them.

They have also told the court that pursuance to the Centre and ONGC's assurance they have made substantial investments to the tune of Rs 1,000 crore.

The two companies had also contended that there was a stress faced by the power sector and the result of the e-auction would be that the natural gas will be supplied to the other sectors at a higher price.

They have also claimed that the auction was in complete variance with the statutory framework for allocation of coal for coal based power projects.

The two companies have also challenged a March 21, 2016 notification of the Petroleum Ministry which provides for forward auction -- gas would be allocated to the highest bidder -- and they have contended that this would be discriminatory to them.

The two companies had told the bench that if the auction was not stayed, they will be compelled to bid and participate in the e-auction for procuring allocation of the gas, which was to be allocated to them as per the assurances of the Centre and ONGC and therefore, irreparable loss and injury would be caused to them.

The Centre and ONGC, on May 20, had urged the court not to pass the order staying the NIT and e-auction, but the bench declined the request, saying the NIT was issued on April 12, 2021, 60 months after the Petroleum Ministry's 2016 notification and "heavens are not going to fall" if another two weeks go bye.

"We have considered the documents as aforementioned and examined the facts and circumstances, brought out above, including the investment of approximately more than Rupees one thousand crores by the petitioners, as averred in the petition.

"Upon conjoint reading of the aforesaid documents, a prima facie case is made out in favour of the petitioners. Balance of convenience is also in favour of the petitioners and if the bidding process is finalized, it would cause irreparable loss to the petitioners," the bench said.

(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.)

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