New Delhi, March 31: Reliance Industries and its customers today failed to agree on the key terms of the sale of natural gas that was to be effective from tomorrow. The government asked the Mukesh Ambani-run company to continue supplies on existing terms in the interim.
After an almost five-hour meeting between RIL and the urea companies, the two sides failed to arrive at a consensus on the rate at which gas should be sold.
The options were the rate of $4.2 per million British thermal unit (mBtu), which expires today, or $8.34 per mBtu, the price that would have been applicable had the Election Commission not postponed the implementation of the Rangarajan committee’s formula till the completion of the general elections.
RIL wanted the 16 fertiliser companies to pay $8.34 per mBtu for about 13 million standard cubic meters per day of gas they bought from its eastern offshore KG-D6 field.
But the fertiliser units said since the new rate was not applicable and the oil ministry had ordered the supply of gas at the existing rate till the model code of conduct was in place, they would provide letters of credit at $4.2 per mBtu.
Fertiliser secretary Shaktikanta Das, who chaired the meeting, said RIL would supply gas on the existing terms in the interim and a new gas sale and purchase agreement (GSPA) would be negotiated.
“We had discussions today with the Fertilizer Association of India (FAI) and RIL on GSPA. Reliance has agreed to supply gas at $4.2 mBtu. In the meantime, Reliance and FAI will sit together to come up with a new agreement,” Das said.
Ire at oil ministry
Finance ministry P. Chidambaram today criticised the petroleum ministry for referring the decision to hike gas prices to the poll panel.
“There was no case to refer the gas price hike to the poll panel,” Chidambaram said, adding that the ministry did it out of “abundant caution about not violating the poll code of conduct”.
Chidambaram pointed out that the gas price issue was taken up by the cabinet twice. “It (cabinet) had taken into account all the pros and cons, including the reservations expressed by different ministries. The cabinet decision is the right decision.”
He warned of the consequences of not implementing the revised gas prices. “For every unit of gas that we do not produce, it does not mean we can live without gas. Today, we’re importing one unit of gas at a much higher price than the approximately $8 (per mBtu) we have indicated from April 1, 2014.”
The government had come under fire for raising gas prices. AAP leader Arvind Kejriwal had complained to the EC against the decision, arguing that the move is against the model code of conduct for political parties.
KG dispute panel
The Supreme Court today appointed an international arbitrator as the chairman for adjudicating the dispute between RIL and the government over the recovery of cost for developing the KG basin gasfield.
James Spigelman, former Chief Justice and Lieutenant Governor of New South Wales, Australia, will be the third arbitrator and the chairman of the arbitral tribunal. The other two members of the tribunal are former chief justices of India — S. P. Bharucha and V. N. Khare. RIL nominated Justice Bharucha as its arbitrator, while Justice Khare was the Centre’s nominee.