The Petroleum Ministry, which had long held that the marketing margin was a bilateral issue between the buyer and seller of gas, referred it to the EGoM after user industries like fertilisers sought a clarification on the legality of the levy
New Delhi: The Petroleum Ministry has asked a ministerial panel to decide if Reliance Industries Ltd (RIL) can charge a marketing margin over-and-above the government-approved sale price for KG-D6 gas, reports PTI.
The issue of the $0.135 per million British thermal unit marketing margin charged by RIL "to cover for the risk and cost associated with marketing of gas" has been referred to an Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee, official sources said.
The Oil Ministry, which had long held that the marketing margin was a bilateral issue between the buyer and seller of gas, referred it to the EGoM after user industries like fertilisers sought a clarification on the legality of the levy.
In addition, the Central Vigilance Commission had in September asked the ministry to furnish reasons why it was not involved in fixing the marketing margin.
The ministry's technical arm, the Directorate General of Hydrocarbons (DGH), too, had opined that RIL should share a part of these earnings with the government. It wanted the marketing margin to be added to the gas sales price of $4.20 per mmBtu and profit-sharing between the contractor and the government to happen at the combined rate of $4.335 per mmBtu.
At present, RIL and the government split profits at the gas sales price of $4.20 per mmBtu after deducting the project cost.
Sources said RIL has contested DGH's view, saying the marketing margin was a cost levied beyond the gas delivery flange and as such, was not regulated by the Production Sharing Contract (PSC).
The PSC provides for fixation of the gas price at the 'delivery point', the point at which an upstream operator transfers custody of gas to a marketing and transportation agency. That point for the eastern offshore KG-D6 gas is Kakinada, in Andhra Pradesh, and the government had in 2007 approved a gas price of $4.205 per mmBtu at the delivery point.
State-owned gas utility GAIL India also charges up to $0.18 per mmBtu as a marketing margin on gas it transports and none of it is shared with the government.
The DGH demand also ran contrary to the stance the ministry took on the issue in Parliament last year.
The then-Petroleum Minister Murli Deora on 24 February 2010 told the Rajya Sabha that companies like RIL need not share the marketing margin with the government as it was a bilateral issue between the seller and the buyer.
"The said price ($4.2 mmBtu for five years) does not include any charge beyond the PSC delivery point. The marketing margin (levied by RIL) is beyond the delivery point and arises as a result of the gas sale and purchase agreement signed between the seller and the buyer," Mr Deora had said.
According to Mr Mukherjee, the Telegraph Act is obsolete, TRAI act is not specific on certain issues and the TDSAT can be approached only by a group of consumers and not by individual consumers
Moneylife (ML): Alternate dispute redressal mechanism helps in solving disputes in a much faster way. How effective is this in the telecom sector?
Achintya Mukherjee (AM): ADR mechanism in the telecom sector is extremely weak. Initially the cases were taken to the Civil Courts or the High Courts through Writ Petitions. Later when the Consumer Protection Act, 1986 was enacted, the Civil Courts and the High courts passed them onto the Consumer Forums. So post the Consumer Protection Act 1986 and Consumer Forums under it), this was the remedy for aggrieved people.
ML: Apart from Consumer Fora, isn’t there any other alternate way to redress one’s grievance like mediation, conciliation or arbitration?
AM: Yes, there is an arbitration route. Section 7B of the Indian Telegraph Act, provides for Arbitration. It is to be noted that at that time telecom industry was under the government control. According to us, under this Section, that remedy is not available because that is for disputes with the “Telegraph Authority” and the service providers today are not the “Authority” but only licensees as such.
Under Section 7B, the Union government appoints somebody from the system as an Arbitrator. The selection is often criticised for the fact that the Arbitrator, most of the times is a junior officer in the structure, like a divisional engineer or at the best a deputy general manager from the PSU. This Arbitration therefore is invariably loaded against the consumer.
ML: With the enactment of the TRAI Act, 1997 what alterations were made to the Dispute settlement mechanism?
AM: The regulator was appointed through the TRAI Act however, this structure of the regulator did not survive for more than 3 years. Reason being, Justice Sodhi who was the first Chairman of the TRAI Act wielded a lot of power under the Act and the Telecom Ministry was not in favour of it. So, when the Arbitration Authority and the appellate body were one body, after the amendment in 2000 the appellate body was separated and only the recommendations for policy making and tariff or connectivity issues remain the job of the regulators. The consumer today has a big problem because if he wants to take up a dispute under the Act, and pursue any resolution for it, he has to go all the way to the only office of the appellate body - the Telecom Disputes Settlement and Appellate (TDSAT) – which is at Delhi.
ML: As a consumer activist on telecom matters, did you raise any concern on this issue of going all the way to Delhi for resolving dispute?
AM: Yes, I had a major case before the TDSAT. In this case, my first prayer was that as a consumer body, the filing fees must be waived. Secondly, I should be heard at Mumbai because the Act has provided that the Union government can appoint additional benches in metros if required. Justice Santosh Hegde, who at that time was the chairperson of TDSAT, dismissed both these prayers.
ML: What do the statistics say on the matters going to TDSAT?
AM: Maximum numbers of the cases going to TDSAT are from the metropolitan region of the Capital and some larger surrounding areas whose access to Delhi is easier and less expensive. Andhra Pradesh, for some reason has reasonably more cases and remaining cases are from Lucknow, Chandigarh and other nearby cities. There are very few cases filed from any other cities or States.
And those who even come from distant places to file cases at the TDSAT, are not the consumers but most of the times are service providers. Indeed, they can afford the expenses (of reaching and filing case at TDSAT), but what about an ordinary consumer?
ML: So it is only the Consumer Courts that take up telecom related issues in the country. What has been your experience in these forums?
AM: Here also, the story has been derailed. In September 2009, Justice Markendey Katju passed a judgment in case of Krishnan & Others versus BSNL. Earlier, BSNL had lost its case in all three Consumer Forums- District, State and National Commission. In the aforesaid judgement however the learned Judge said that: This matter came under the purview of Section 7B of the Indian Telegraph Act and that the Consumer Forums had no jurisdiction in the matter.
So the new problem that arose after this judgment is that all Consumer Courts across the country started dismissing telecom consumer matters merely on grounds of jurisdiction. We are in a very peculiar stage today. Consumer Courts, who up till now, were hearing telecom disputes started dismissing them so much so, even some benches of the National Commission have taken such a stand.
ML: Has anyone initiated a legal battle against this?
AM: Yes, we fought the case here in Mumbai. The District Forums in Mumbai supported our arguments. Accordingly Forums from Mumbai, Chandigarh and one from Vijayawada have relied on our judgment and so at these places things are positive. However, but Tamil Naidu, Jammu Kashmir, Delhi and many other states are still interpreting the Supreme Court’s judgment differently.
ML: Does this mean that no other forums other than TDSAT can accept telecom matters in the country? Even at this forum, what are the conditions that need to be met?
AM: Yes, TDSAT accepts telecom matters but with pre-conditions. One of the pre-condition is that it will accept matters only for a “Group(s) of Consumers”. This means a minimum of two aggrieved consumers who have similar grievances can approach TDSAT.
But how does one locate and then coordinate with other subscriber who has a similar grievance? Additionally, TDSAT is located at Delhi, which becomes an expensive option for consumers from other parts of the country. One can also approach the High Courts but only through Writ petitions. This again is an expensive and a time consuming option.
It has been suggested that consumer organizations should take up similar consumer grievances because similar cases can find their way to organizations like ours. That is exactly what we tried to do in the Cable TV disputes in 2005, in the case filed by the Bombay Telephone Users’ Association together with the Consumer Guidance Society of India. Even though we are “groups of consumers” and fighting for a class action, it was interpreted that we had no “lis” in the matter and the third petitioner, a housing society would stand to benefit by the judgment for which transactional benefit, no waiver of fees of Rs.10,000/- could be considered. The housing society had joined as a petitioner only because their evidence and records were well organized. But they were clear that they would not be able to afford the heavy expenses for fighting a case all the way at Delhi.
ML: Then how do consumers resolve their disputes? Where should he go?
AM: The only option for an aggrieved person today is to take recourse of the machinery that has been placed within the system. That can only be an independent impartial body. Today it is a three tier system- a) Customer Care b) Nodal Officer and c) Appellate Authority.
The Nodal Officer can be reached through the phone or E-mails. And if it is through phone, one gets tied up in their sophisticated interactive voice response (IVR) system and after sometime suddenly the phone gets disconnected. They (the nodal officers) very rarely attend the phone either by design or because they are so overburdened.
The Appellate Authority too has its own drawbacks. Matters like connectivity problem or even mobile number portability may get resolved here, albeit with great difficulty. However, monetary issues like overpriced bills and refunds are rarely resolved and there is always a problem while trying to solve these disputes at the Appellate Authority level.
ML: What are your recommendations to improve the redressal mechanism for subscribers in the telecom industry?
AM: I strongly feel that there is an urgent need for an Ombudsman’s Office in the system. However the Ombudsman’s Office should not be like that in other sectors. Her in telecom sector, it should be Ombudsman–in–Council overseeing the functions of Ombudsman office, and comprising people from the consumer representatives bodies, telecom industry and from the government so that a balance of fairness and impartiality not only exists but is seen to exist in the process leading to resolutions.
In addition, the avenues to file telecom disputes before statutory bodies should continue to be operative. The Government of India should take steps to clarify, by ordinance if necessary that the Consumer Forums will continue to have jurisdiction in telecom related cases. The delay in deciding the jurisdiction of consumer forums as has been taken up by our Association in the Krishnan and Others v/s BSNL and going all the way up to the Supreme Court will not only take up a lot of time but may frustrate thousands of consumers waiting for justice in telecom matters.
(Achintya Mukherjee is a well known consumer activist and honorary joint secretary of the Bombay Telephone Users' Association)
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