Use of Force Majeure Clause by GAIL, IOC expected to end in disputes

The decision by several consumer companies to invoke the force majeure clause, in the wake of the Covid-19 crisis, is likely to end in disputes, according to experts. Majority of the players are of the opinion that a final decision on this should be coming from the government.

Consumers had opted for force majeure notices to gas marketers like GAIL, Indian Oil (IOC) and Gujarat State Petroleum Corporation (GSPC), after their commercial operations and factories were shut following the lockdown. After this, GAIL, too, had issued similar notices to its suppliers like ONGC, Oil India and Petronet.

IOC, too, has declared force majeure on crude purchases from four of its biggest suppliers – Saudi Arabia, Iraq, UAE and Kuwait – as refinery run rates have been cut down in view of the plummeting fuel demand.