With the Election Commission (EC) asking the government to defer implementation of gas price hike till elections are completed on May 12, Reliance Industries has asked the Oil Ministry to announce the 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.
The new formula for pricing of all domestically produced natural gas was notified on January 10 and published in Gazettee on January 17. The EC last month directed the government to defer its implementation till electioneering was concluded. The new pricing formula almost doubles the price of natural gas to about $8.34 per million British thermal unit.
In a letter to oil secretary, RIL president and COO, B Ganguly said “... 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.”
RIL said the $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.
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,” Ganguly wrote on April 3.
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.