RIL asks Oil Min to announce new gas price on May 13

PTI Delhi Bureau

New Delhi, Apr 29 (PTI) Reliance Industries has asked Oil
Ministry to announce a new natural gas price immediately after
polling ends on May 12, saying this was necessary to avoid
irreparable loss to all parties, including the government.
        While a new formula for pricing of all domestically
produced natural gas was notified on January 10 and published
in Gazettee on January 17, the Election Commission last month
asked the government to defer its implementation till general
elections are completed.
        The new pricing formula, that almost doubles the price of
natural gas to about USD 8.34 per million British thermal
unit, was to be implemented from April 1 but following the
directive of the poll watchdog, was put in abeyance till model
code of conduct for elections is in place.
        "... the new price as per the guidelines (approved by the
Cabinet twice last year) must immediately be intimated once
the model code of conduct is not in force i.e. on May 13, 2014
which is after the last day of polling on May 12, 2014," RIL
President & COO B Ganguly wrote to the Oil Secretary.
        RIL said the USD 4.205 per mmBtu price for gas from its
eastern offshore KG-D6 field was valid for the first five
years of production, which ended on March 31.
        But since the poll watchdog deferred implementation of
the new pricing, the company continues to sell gas at old rate
on "provisional basis," Ganguly wrote on April 3.
        He said immediate intimation of the new rate after poll
code ends on May 12 was "necessary to avoid extended dispute
and irreparable loss to all parties to the Production Sharing
Contract (PSC)."
        "Any other course of action would be in violation of the
PSC," RIL said.
        RIL has asked fertiliser companies, its sole consumers,
to provide payment guarantees at new rate. Fertiliser
companies have, however, refused to do so saying no new rate
has so far been intimated.
        "We are seeking adequate comfort in the Gas Sale Purchase
Agreements (through letter of credit or otherwise) to ensure
that once the price is notified, we, on behalf of all the
parties to the contract, are able to recover the revised price
with effect from April 1, 2014," the company said.
        RIL said whenever the government notifies the gas price
effective from April 1, it would recover the differential
price from its customers.