DGH wants margin built into RIL’s Gas price | business | Hindustan Times
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DGH wants margin built into RIL’s Gas price

In a surprise move, oil regulator DGH has asked Reliance Industries to include the marketing margin that the company charges on sale of natural gas from its field, to the approved gas price, while calculating the government’s profit share from the project.

business Updated: Feb 12, 2010 21:25 IST

In a surprise move, oil regulator DGH has asked Reliance Industries to include the marketing margin that the company charges on sale of natural gas from its field, to the approved gas price, while calculating the government’s profit share from the project.

RIL charges $0.135 (Rs 6.30) per million British thermal unit to cover marketing risks of gas from Krishna Godavari basin-D6 fields. The sale price of gas is $4.20 (Rs 196.14) per mmBtu. Sources said DGH wants 5 per cent royalty payable to the government to be calculated on the price of $4.33 (Rs 212.44) per mmBtu.

Under the Production Sharing Contract a contractor (RIL in case of D-6) can recover the capital and operating expenditure, but marketing costs are excluded, and a contractor is not allowed to recover the same from the sale proceeds.

While RIL’s spokesperson could not be immediately reached for comments, S.K. Srivastava, Director General, Directorate General of Hydrocarbons (DGH) was not available for comments.