ONGC ordered to pay wharfage compensation to Mumbai Port Trust


State-run explorer Oil and Natural Gas Corporation (ONGC) has been ordered to pay wharfage compensation to the Mumbai Port Trust (MbPT) as wharfage compensation for the transportation of crude oil through two pipelines the company had laid within the limits of the government-owned port, ONGC said on Thursday.

Replying to a clarification sought by the stock exchanges, ONGC said it is internally examining the admissibility of the claim by the Mumbai Port Trust of around Rs 242 crore as wharfage compensation.

The explorer said the dispute between it and the MbPT was pending for a long time over payment of wharfage for the supply of crude oil to local refineries in Mumbai through the pipelines and to coastal refineries through tankers loaded from Jawaharlal Nehru Port Trust (JNPT).

“ONGC had objected to the payment of Way Leave Fee for pipelines and wharfage compensation on crude oil in various forums. No payment was made till 1989 although the pipelines were laid way back in 1978. In 1989, ONGC made a provisional payment of Rs 10 crore as per the decision of inter-ministerial meetings,” the filing said.

The Tariff Authority for Major Ports had (TAMP) passed an order for wharfage compensation payable by ONGC on October 3, 2018.

As per the TAMP order “ONGC shall pay to MbPT a compensation at one half of wharfage rate as applicable on the per tonne of crude oil which will be imported into the port of Mumbai through all or any of the ONGC pipelines.”

“A sum of Rs 173.69 crore has to be paid to MbPT by ONGC in lieu of wharfage compensation charges since 2013-14,” as per the TAMP order, ONGC said.

Instead, according to ONGC, MbPT has sent a demand of Rs 241.69 crore after including interest at the rate of 18 per cent since 2013-14.

“The issue is being examined for admissibility of the claim and further course of action,” ONGC said.

Besides, payment of ‘way leave’ charges for pipelines passing through port limit was pending, it added.

“ONGC entered into an agreement with MbPT under duress on 28.01.2005, in order to receive permission for laying new pipelines. The agreement lacked clauses for duration, exit, arbitration etc and as such was a unilateral agreement.,” the company said.

“ONGC has been making payment to MbPT as per the agreement without receiving any services for levy of compensation for crude oil supplied to local refinery through ONGC’s own pipelines (for which way leave fees is being paid regularly) and marine tankers loaded at JNPT.”

Over the years, ONGC has written several letters to the government for resolving the dispute on wharfage compensation and way leave charges but an amicable solution to the problem could not be reached, the statement added.

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