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Gold plating allegations in East West Pipeline-III: Capex validated for PNGRB by unnamed
Apr 08: The PNGRB while arriving at a 37% hike in tariff for the East West Pipeline last month had assumed a capex of Rs 16,307 for the East West Pipeline after adjusting downwards the capex claim of Rs 17,240 crore by the owners of the pipeline.
8The tariff was reviewed by appointing the services of an "internationally reputed consultant appointed through bidding". The consultant however was not named.
8If indeed the Dutch authorities were correct that the pipeline may have been gold plated to the extent of $1.1 billion, and they are far from fully establishing it yet, then theoretically the capex could go down by more than Rs 7000 crore. This, if taken cognizance by the PNGRB, will then have a severely negative impact on the tariff rate of the pipeline.
8"Just to be able to avoid allegations of overlooking gold plating, the PNGRB will have to strengthen its internal ability to determine the exact cost of all pipelines under its ambit in ways other than going entirely by what a consultant has to say. Also how the capex estimate is arrived at should be made transparent and public," a big gas user in the fertilizer sector told our sister publication, "Eventually, as a gas buyer, I have to pay for the higher cost, if any," he added.
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