New Delhi: India's official auditor on Tuesday hauled up gas utility GAIL India for giving undue benefit of over Rs.246 crore to private power producers by supplying natural gas at subsidised rates.

The Comptroller and Auditor General (CAG) also rapped GAIL for its failure to check subsidised gas being used by fertiliser companies for manufacturing non-fertiliser products.

In a report tabled in the Parliament, CAG criticised the public sector firm for its failure to recover Rs.29.78 crore from Reliance Industries in penalties for over-drawing gas for one month.

It said GAIL, in contravention of oil ministry directives, supplied natural gas at subsidised rates to ineligible consumers supplying electricity to their consumers at commercial rates.

GAIL supplying government administered price mechanism (APM) gas to power generating companies which supplied to consumers at commercial rates in 2006 "led to under recovery of Rs.246.16 crore in Gas Pool Account, undue benefit to such producers to that extent and depriving eligible consumers of subsidised/APM gas", CAG said in the report for the fiscal 2010-11.

The government administered gas is meant only for power companies generating electricity for supply to the grid for distribution through public utilities.

CAG said GAIL also failed to evolve a suitable system to ascertain the quantity of natural gas utilised by fertiliser companies for manufacturing non-fertiliser products and its billing at market price instead of subsidised price.

The gas used for non-fertiliser products was to be charged at market price from Jan 1, 2009.

"This led to non-implementation of Ministry's directives and consequent substantial under recovery in Gas Pool Account besides extra avoidable burden on government subsidy towards fertiliser production."

CAG said there was also lack of effective coordination between the oil ministry and the fertilisers and chemicals ministry in resolving the issue of gas usage for non-fertiliser products.

"This situation led to under recovery in the Gas Pool Account as well as excess payment of subsidy on fertiliser production by the government, for the period from July 2005 to December 2008," the report said.


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