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Petronet LNG shares fall after corruption allegations are made in Indian Parliament

Tuesday, 24 March 2020
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The Indian Ministry of Petroleum and Natural Gas said it had received several complaints of alleged corruption and irregularities against senior executives of Petronet LNG, the owner of two import terminals.

Petroleum Minister Dharmendra Pradhan said in a written reply to a question in the Indian lower house of Parliament, the Lok Sabha, that among those complained about was Petronet Chief Executive Prabhat Singh.

The Minister said that the complaints against the CEO and other executives had been forwarded to the Chairperson of Audit Committee of Petronet for appropriate action. 

Petronet shares are listed on the Bombay Stock Exchange and fell 5.5 percent on March 24 to 179.20 rupees after the allegations were made and had been at 189.70 rupees at the previous close.

The shares have declined in the past six months along with other energy stock and had reached a 52-week high of 302 rupees on the 23rd of September 2019.

Petronet is India’s largest LNG importer and CEO Singh has been at the helm since September 2015. 

His five-year term comes to an end in six months from now and he is eligible for a two-year extension of service until he achieves the age of 65 years. 

“Several complaints have been received in the Ministry of Petroleum and Natural Gas against MD & CEO, PLL and other officers of PLL regarding alleged corruption-irregularities,” said the official statement.

Asked if the government has conducted any audit of the accounts of Petronet regarding the irregularities during the last three years, the Minister said that Petronet was board-managed company and not a government company as per the Companies Act.

Petronet currently operates India’s busiest regasification facility at Dahej, north of Mumbai, with 17.5 million tonnes per annum of capacity and six storage tanks. 

The company was formed by the Government of India in 1998 specifically to import LNG and will be expanding its interests in the years ahead into areas such as fuel distribution.

Shareholders in Petronet, which began operations in 2004 are individual investors while stakes of 12. 5 percent are also held by each of the largest Indian energy players, Gas Authority of India, Indian Oil Corp., Oil and Natural Gas Corp. and Bharat Petroleum Corp.

Petronet’s Dahej import terminal is operating at full capacity while its second terminal at Kochi, in the southwest state of Kerala ,operates at just 18 percent of capacity because of a lack of regional gas infrastructure.

 

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