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Govt natural gas supply favoured Reliance and others-CAG

New Delhi, Sep 4 (Truth Dive): Gas utility, GAIL India by supplying natural gas at subsidised rates gave over Rs 246 crore of undue benefit to private power producers said the Comptroller and Auditor General (CAG). CAG has pulled up gas utility GAIL India for giving over Rs 246 crore of undue benefit to private power producers by supplying natural gas at subsidised rates.

Over-drawing gas for one month by Reliance Industries to the tune of Rs 29.78 crore was not recovered by Gail said the CAG.

The fertiliser companies for manufacturing non-fertiliser products used subsidised gas which CAG report said GAIL failed to check it.

The official auditor, in its report tabled in Parliament today, said GAIL in deviation of the Oil Ministry’s directives that government administered gas was meant only for power companies generating electricity for supply to the Grid for distribution through public utilities, supplied natural gas at subsidised rates to consumers generating and supplying electricity to their consumers at commercial rates.

Supplies made to Trombay unit of Rashtriya Fertilizer and Chemicals Ltd (RCF) between January 2009 and October 2009 which supplied to consumers at non-fertiliser products resulted in loss of Rs 40.48 crore.

Considerable revenue was foregone by GAIL as well as excess payment of fertiliser subsidy by the government, considering all the units of RCF, other fertiliser companies and the period prior to January 2009 said CAG.

Lack of effective coordination between the Oil Ministry and the Ministry of Fertilisers and Chemicals in resolving the issue led to laxity on the part of GAIL in ascertaining the usage of gas in non-fertiliser products, CAG said

Excess payment of subsidy on fertiliser production by the Government, for the period from July 2005 to December and under recovery in the Gas Pool Account took place.

In absence of any mechanism to test verify by GAIL of the gas usage as self-certified by the fertiliser companies the chances of sub-optimal recovery in Gas Pool Account and excess payment of the Government subsidy on fertiliser production could not be ruled out, further, for the period from January 2009 onwards.

Gas supply agreement with RIL for recovery of charges levied for overdraw of gas beyond the allocated quantity did not have a regular clause in gas supply agreement with RIL for recovery of charges levied for overdraw of gas beyond the allocated quantity.

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