'No Take-Or-Pay Agreement': IOC Clarifies After Mahua Moitra's 'Brazen Theft' Claim On Adani Ports Gas Deal
In response to Moitra's tweet, IOC stated that it imports LPG at various ports, including Haldia (West Bengal), Vizag (Andhra Pradesh), and Ennore (Tamil Nadu) on the east coast, Mumbai (in Karnataka), Dahej (in Gujarat), and Dahej (in Gujarat).
New Delhi: Indian Oil Corporation (IOC) clarified on Twitter on Thursday that there is no take-or-pay agreement regarding its initial agreement to hire Adani Group's port at Gangavaram in Andhra Pradesh for LPG imports in addition to existing agreements with nearby ports.
Adani Ports and Special Economic Zone Ltd.'s earnings call presentation, which stated "MoU signed with IOCL for a take-or-pay contract at Gangavaram Port for building LPG handling facilities," was contradicted by this statement, which came in response to TMC's Mahua Moitra's claim that the port facility had been hired without a tender. Based on the statement made in the presentation, Moitra tweeted, "Brazen theft" in response to the news.
Adani Ports earning call presentation said "MoU signed w/IOCL for take-or-pay contract at Gangavaram Port for building LPG handling facilities."@IndianOilcl denying it !
— Mahua Moitra (@MahuaMoitra) February 16, 2023
Adani lying to investors to show less risk /fixed demand. @HardeepSPuri Sir pls get to bottom of this. https://t.co/mDbbUzDhHo
Moitra stated, "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!," tagging Oil Minister Hardeep Singh Puri and CVC on Wednesday evening.
In an unusual move, the IOC issued a series of tweets on Thursday to clarify its position.
It stated that "IOC has just signed a non-binding MoU with APSEZL till now," and that it does not offer any bids for the hiring of facilities at ports for the import of LPG, a commodity that India does not produce enough of.
It stated, "There is no take-or-pay liability or any binding agreement, as of now."
The state-owned company will be required to pay for using the terminal's full 5 lakh tonnes capacity annually under a take-or-pay contract even if it ships less than the committed quantity.
IOC currently imports approximately 7-8 lakh tonnes of LPG annually through the state-run Visakhapatnam or Vizag Port, which is adjacent to Gangavaram port.
The strategy was made public on February 7 when the Adani Group's ports unit, APSEZL, released financial results for the third quarter.
One of the opposition parties has demanded an investigation into allegations made by a US short seller against the Adani Group. Moitra's party is one of those parties.
On January 24, Hindenburg Research said that the Adani Group was guilty of stock manipulation and accounting fraud. The Adani Group has denied these claims, calling them "malicious," "baseless," and a "calculated attack on India."
Over the past three weeks, the market value of the Adani Group's listed companies dropped by more than USD 125 billion. On Thursday, the majority of group companies' shares rose.
In response to Moitra's tweet, IOC stated that it imports LPG at various ports, including Haldia (West Bengal), Vizag (Andhra Pradesh), and Ennore (Tamil Nadu) on the east coast, Mumbai (in Karnataka), Dahej (in Gujarat), and Dahej (in Gujarat).
Kochi in Kerala and Paradip in Odisha will host two additional import terminals. The IOC stated, "These will be utilized in due course."
"IOC enters into agreements with various ports on a regular basis to enhance capability to supply LPG across India. For hiring of LPG terminals, OMCs evaluate the infrastructure for suitability for catering to the nearest market at a reasonable cost. No separate tender is invited," it said. Oil Marketing Companies are OMCs.
"LPG demand in the country is on a constant increase. There are 31.5 cr connections after the Ujjwala Scheme; up from 14 cr earlier. OMCs are constantly on the lookout for new port facilities which make commercial sense in Logistics," IOC said.
According to the company, there are currently only two terminals near Vizag—one operated by South Asia LPG, a joint venture between France's TotalEnergies and HPCL, and the other by East India Petroleum Limited, a private company—in terms of the terminal hiring pacts on the east coast.
IOC stated, "SALPG charges Rs 1,050 and EIPL charges Rs 900 as charges with lower capacity vessel unloading capability."
"EIPL facility has no captive connectivity to be used on a continuous basis. IOC has just signed a non-binding MoU with APSEZ till now. APSEL has offered a price of Rs 1,050 for LPG import terminaling charges with facility of unloading of bigger vessels of refrigerated LPG directly," it added.
EIPL facility has no captive connectivity to be used on continuous basis. IOC has just signed a non binding MoU with APSEL till now. APSEL has offered a price of ₹1050 for LPG import terminaling charges with facility of unloading of bigger vessels of refrigerated LPG directly.
— Indian Oil Corp Ltd (@IndianOilcl) February 16, 2023
The Gangavaram port would make it possible to handle larger 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.
"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.
The Vizag port currently handles 0.7 million tonnes of LPG per year, while the new port is designed to handle 0.3 million tonnes.
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