Indian Oil Corp has issued a statement on Thursday, February 16, regarding its involvement with the Adani Group's proposed liquefied petroleum gas (LPG) import terminal in response to public scrutiny.
The state-run refiner took to Twitter to clarify that there was no binding agreement or take-or-pay liability in place with Adani Ports.
What is take-or-pay?
It is a risk-sharing deal that binds the buyer to pay a charge even if it changes its mind later and decides not to use the facility.
The clarification came after Opposition lawmaker Mahua Moitra accused Indian Oil of not following proper tender processes in securing the agreement.
Moitra's tweet was in reference to a report from The Economic Times that suggested Indian Oil would be transferring “a large chunk” of LPG imports to the Adani facility at Gangavaram port from the adjacent Visakhapatnam port.
The newspaper report also stated that Indian Oil would fully underwrite Adani’s LPG terminal. The facility will have the capacity to receive 500,000 tonnes a year.
Indian Oil's spokeswoman explained that the agreement with Adani had only been recently signed and that there was no commitment on capacity use.
According to the IOC, the Adani Ports agreement is advantageous for the company. This is because Adani Ports has offered a price of Rs 1,050 for LPG import terminaling charges, which includes the added benefit of being able to unload refrigerated LPG directly from larger vessels.
In contrast, SALPG charges Rs 1,050 and EIPL charges Rs 900 but have a lower capacity for unloading vessels and lack a captive connectivity system for continuous use. Currently, the only two terminals near Vizag are SALPG (a joint venture between TOTAL and HPCL) and EIPL (a private company).
Additionally, IOC has also said they enter into agreements with various ports on a regular basis to enhance their capability to import LPG from various ports, including Kandla, Mundra, Pipavav & Dahej, Mumbai and Mangalore, Haldia, Vizag and Ennore.
They added that the demand for LPG is constantly increasing and oil marketing companies (OMCs) are always on the lookout for new port facilities.
The Adani Group's recent stock performance has been rocky following the release of a report by US short seller Hindenburg Research, which alleged market manipulation and accounting fraud. As a result, some of Adani's projects are likely to face delays.
(Edited by : Shoma Bhattacharjee)
First Published: Feb 16, 2023 5:20 PM IST
