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Informist, Thursday, Aug. 21, 2025

 

NEW DELHI – The Delhi High Court Thursday rejected Gujarat State Fertilizers & Chemicals Ltd.'s plea against a 2023 arbitral award favouring GAIL (India) Ltd. The arbitration tribunal had upheld the demands raised by GAIL (India) against the petitioner company for differential price of gas based on end use as directed by the Ministry of Petroleum and Natural Gas.

 

In 2018, GAIL had issued a letter raising an aggregate claim of INR 359.56 million against Gujarat State Fertilizers. The amount was calculated for gas supplied under five different contracts with the petitioner company. Thereafter, more claims were raised by GAIL against the company for differential price of gas based on end use.

 

The case has its genesis from contracts between Gujarat State Fertilizers and GAIL, whereby the latter company was sourcing gas from various oilfields and supplying it to the former. In 2006, the petroleum ministry had issued a letter directing GAIL to get details about quantities of gas supplied under the administered price mechanism being used by fertiliser units for non-fertiliser purposes. The ministry had said in the letter that administered price mechanism gas being used by fertiliser units to manufacture products other than fertilisers should be charged at market rate.

 

In 2014, the ministry directed that for all future gas supplies to fertiliser units, GAIL should insist on quarterly returns duly certified by the Fertilizer Industry Coordination Committee. In case these certificates were not received on time, GAIL would charge rates beyond the administered price mechanism for the entire supply of gas.

 

The petitioner company said the gas supplied under the administered price mechanism was insufficient and it would submit monthly cost auditor-certified end use certificates. However, GAIL said only certificates issued by the Fertilizer Industry Coordination Committee would be accepted in view of the ministry's directions. In the absence of such certificates, GAIL said it would have to raise invoices for the difference between market price and administered price for the entire supply of gas.

 

Thursday, shares of GAIL (India) ended marginally lower at INR 177.77 on the National Stock Exchange. Shares of Gujarat State Fertilizers & Chemicals ended 1.7% lower at INR 211.23.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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