Court To Hear ONGC Plea Against E-auction Of Natural Gas From KG-Basin


Delhi High Court will hear the plea for the matter on June 4, 2021

The Delhi High Court Friday said it will hear on June 4 a plea by state-run ONGC for vacating an interim order putting on hold its tender notice and the consequent e-auction for 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 was informed by Solicitor General Tushar Mehta that the application has been filed against the high court’s May 20 order as stay of the e-auction was “ultimately leading to loss of public money”.

The court said it will hear the matter on June 4, the date already fixed on May 20 when the notice inviting tender (NIT) and e-auction were stayed. The application has been filed after the Supreme Court declined to entertain the appeals filed by ONGC and the Centre against the order and asked them to approach the high court for vacation of the interim order.

The high court on May 20 had said that a prima facie case was 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 had said.

With the observation the court had 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.

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