New Delhi, April 29: Reliance Industries Ltd has asked the oil ministry to announce the new gas price immediately after the end of elections.
“The new price according to 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,” RIL president and chief operating officer B. Ganguly wrote to oil secretary Saurabh Chandra.
The new formula for pricing all domestically produced natural gas was notified on January 10 and published in the gazette on January 17.
However, the Election Commission had asked the government to defer its implementation till the general elections.
The new pricing formula, that is expected to double the price of gas to about $8.34 per million British thermal unit (mBtu), was to be implemented from April.
RIL said the $4.20 per mBtu price for gas from its facilities in the Krishna-Godavari basin off the Andhra coast (KG-D6 basin) was valid for the first five years of production, which ended on March 31. However, the company continues to sell gas at the old rate on a “provisional basis,” Ganguly wrote on April 3.
He said the immediate intimation of the new rate 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 has asked fertiliser companies, its sole consumers, to provide payment guarantees at the new rate. Fertiliser companies have refused to do so.
“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.
Meanwhile, the oil ministry is planning to discuss the input price of gas with its finance counterpart as power firms are unlikely to pick up the fuel at $8.3 per mBtu.
The Supreme Court today appointed Michael Hudson McHugh, former judge of the High Court of Australia, as the third arbitrator to resolve the dispute between the Centre and RIL on the KG basin.