Reliance says new gas rates will still apply from April
After an arbitration notice to the government on revising gas prices, Reliance Industries has told buyers that its supplies from April 1 will be at new rates as and when they are notified, even if they are only paying the old tariff of USD 4.205 per unit currently.
The current tariff expired March 31.
"We have already informed you previously, gas is being supplied to you at a provisional price of USD 4.205 per mmbtu and with effect from 1st April, 2014 the revised price shall be applicable to all gas supplied by us and accepted by you," RIL said in a letter to fertiliser companies.
In 2007, the government had fixed the price for supply of gas from Krishna-Godavari basin (KG-D6) at USD 4.205 per mmbtu for the initial five years of production. The output started in April 2009, and thus the pricing formula expired in March 2014.
A panel headed by chairman of the Prime Minister's Economic Advisory Council C. Rangarajan has recommended a new formula under which the price is likely to be almost doubled at USD 8.3 per unit.
The union cabinet headed by Prime Minister Manmohan Singh accepted the decision, but has not been notified due to the election.
In a one-page letter, RIL pointed out that the company has already initiated arbitration process against the government for continued delay in notifying the gas price applicable under the Domestic Natural Gas Pricing Guidelines, 2014.
"The gas price payable for the supplies received by you from 1st April, 2014 onwards shall be the price as may be made applicable from such date by virtue of a notification by the government or the outcome of the above arbitration," Mukesh Ambani-led energy giant said.
"You have the option of not accepting the gas, but please note that by continuing to accept the gas being supplied to you, you will be deemed to have accepted the above condition," it said.
Reliance Industries, along with its partners BP and NIKO last week sent arbitration notice to the government seeking implementation of the revised gas price.
Industry sources said power companies and some other major buyers have already agreed on the terms of the new gas price formula. However, fertiliser firms have refused to accept it.
(Posted on 14-05-2014)