RIL to sell gas at current rate as govt defers price revision

        New Delhi, Mar 28 (PTI) Reliance Industries will continue
to sell natural gas from its eastern offshore KG-D6 fields at
the current rate until the next government decides on a
revision in prices.
        Oil Minister M Veerappa Moily approved continuation of
the existing rate of USD 4.2 per million British thermal units
until the new government, which will be in place in May,
decides on implementation of the Rangarajan formula.
        He deferred the new pricing regime, which would have
almost doubled gas rates from April 1, following advice from
the Election Commission, oil ministry sources said.
        The delay will not have a material bearing on 85 per cent
of the gas produced in the country as firms such as ONGC can
continue sales at USD 4.2 per mmBtu on existing contracts.
        However, new contracts needed to be signed for KG-D6 as
RIL's current sales pacts expire at the end of the month.
        Sources said RIL and buyers of its KG-D6 gas settled most
issues on the new sales pacts after a meeting called by the
oil ministry.
        Urea plants had flagged about 10 issues, including the
duration of the contract and supplier liabilities, in the new
Gas Sales and Purchase Agreement (GSPA) that RIL had proposed
for the period starting April 1.
        "Most of the issues have been resolved, barring one or
two," a ministry official said.
        RIL agreed to a five-year validity for the new GSPA, like
the current one. It previously offered three-month contracts
in line with the new gas pricing policy, where rates would
have changed quarterly, based on average international hub
prices and the cost of imported LNG in the preceding 12 months
with a lag of one quarter.
        This had been opposed by the 16 fertiliser units that buy
KG-D6 gas.
        To continue supplies from April 1, RIL has forwarded a
simplified GSPA term sheet to buyers that would be valid till
it is replaced by the GSPA.
        The key features of the GSPA term sheet include a clause
allowing buyers to pay only for the quantity supplied.
        While the seller will be responsible for quality specs of
gas, in times of constraint, gas will be supplied on a
pro-rata basis to all fertiliser buyers.
        Key terms like invoicing, payments and letters of credit
are similar to the GSPA signed in 2009.
        The official said the issue that remains to be resolved
is the marketing margin to be charged by RIL.
        RIL can sell gas from KG-D6 only to customers identified
by the government. It supplies 12-13 million standard cubic
meters of gas a day.

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