IOC contradicts Adani after Mahua Moitra raises stink of corruption in LPG deal
Indian Oil Corporation (IOC) on Thursday took to Twitter to clarify on its initial pact for hiring Adani Groups port at Gangavaram in Andhra Pradesh for LPG imports in addition to existing pacts with nearby ports, saying there is no take-or-pay agreement.
The statement came in response to TMC’s Mahua Moitra raising a stink of a scam in hiring of the port facility without a tender. It also contradicted Adani Ports and Special Economic Zone Ltd’s (APSEZL) earning call presentation that said “MoU signed with IOCL for a take-or-pay contract at Gangavaram Port for building LPG handling facilities”. Moitra, reacting to the news based on the statement in the presentation, tweeted, “Brazen theft”.
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Tagged Oil Minister, CVC in tweet
Tagging Oil Minister Hardeep Singh Puri and CVC on Wednesday evening, Moitra said, “No tender. No CVC norms. Moving business from Vizag Port to Gangavaram. Skimming from coal, skimming from gas, now skimming from chula in every household. Shame!”
IOC in an unusual move on Thursday sent out a series of tweets to clarify its position. “IOC has just signed a non-binding MoU with APSEZL till now,” it said, adding that it floats no tenders for hiring of facilities at ports to import LPG — a commodity that India is short of production. “There is no take-or-pay liability or any binding agreement, as of now,” it said.
What’s take-or-pay contract?
A take-or-pay contract means that the state-owned firm will have to pay for using the terminal’s full 5 lakh tonnes capacity a year even if it ships less than the committed quantity.
IOC currently uses state-run Visakhapatnam or Vizag Port, located adjacent to Gangavaram port, to import some 7-8 lakh tonnes of LPG annually. APSEZL, the ports unit of the Adani Group, had revealed the plan while announcing the company’s third quarter financial results on February 7.
Two more import terminals coming up
Replying to Moitra’s tweet, IOC said it imports LPG at various ports. Two more import terminals are coming up at Kochi in Kerala and Paradip in Odisha. “These will be used in due course of time,” IOC said.
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Providing detailing about the terminal hiring pacts on the east coast, the company said currently there are only two terminals near Vizag — one by South Asia LPG (a joint venture of France’s Total Energies and HPCL) and East India Petroleum Limited (EIPL). The Gangavaram port would allow handling of bigger vessels.
“This gives an additional advantage compared to SALPG & EIPL as bigger vessels can be quickly unloaded. Such an arrangement will save freight & demurrage due to extra time for evacuation. There is no take-or-pay liability or any binding agreement, as of now,” IOC said.
While 0.7 million tonnes per annum of LPG is imported at Vizag port now, the new port is for handling 0.3 million tonnes. “Vizag will continue to be utilised. Availability of multiple terminals will give operational flexibility, increase competition among terminal operators & an opportunity for competitive rates,” it added.
(With inputs from agencies)
