Millennium Post

Reliance has the last laugh; Cabinet lets it enjoy gas price hike

This will be subject to the ‘condition’ that RIL gives a bank guarantee to cover its liability if gas-hoarding charges are proved. The rate in April 2014, when the new pricing is to be implemented, will be about $8.4 per million British thermal units (mmBtu) against the current $4.2.

The bank guarantee, which will be equivalent to the incremental revenue that Mukesh Ambani-owned RIL will get from the new gas price, will be encashed if it is proved that India’s largest private firm had, indeed, hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11, said sources.

Prodded by the Finance Ministry, the Ministry of Petroleum & Natural Gas (MOPNG) had initially proposed to deny the new gas prices that would kick in from the next fiscal (April 2014-March 2015) till such time that RIL either makes up for the output shortfall over the past three fiscals, or it is proved that the company was not responsible for its production falling below targets. The issue had held up notification of the new gas pricing formula that would be applicable to all producers — public and private — and all forms of gas — conventional and unconventional forms like coal-bed methane and shale gas.

In June the government approved the C Rangarajan formula for pricing of all domestically produced natural gas at an average of global gas hub rates and price at which India imports liquefied natural gas (LNG).

(With Agency inputs)

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