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Marketing margins are justified: RIL

After being charged of levying “unjustified marketing margins” on the sale of gas from its KG-D6 gas fields, the Mukesh Ambani controlled Reliance Industries Ltd (RIL) has defended its case saying it was essential to cover risks and costs incurred by it in marketing of gas.

business Updated: Sep 27, 2009 21:07 IST
HT Correspondent

After being charged of levying “unjustified marketing margins” on the sale of gas from its KG-D6 gas fields, the Mukesh Ambani

Measuring the gap

* RIL charges $0.135 (Rs 6.62) per unit marketing margin over and above the gas price.
* Reliance Infra and NTPC were reluctant to pay this levy.
* NTPC has also sought to know whether margins levied had government approval.
* RIL says it is to cover risks like seller liabilities in case of non-supply, customers drawing less than their quota and other settlement of disputes and claims.

controlled Reliance Industries Ltd (RIL) has defended its case saying it was essential to cover risks and costs incurred by it in marketing of gas.

“The marketing margin being charged by RIL on sale of KG-D6 gas is fair and justified consideration for the risks and costs undertaken in the GSPA (gas sales and purchase agreement), including such risks and costs beyond the delivery point," RIL wrote to the secretaries of power and petroleum on September 25.

RIL said the $0.135 (Rs 6.62) per unit marketing margin over and above the price was to cover risks like sellers liabilities in case of non-supply, customers drawing less than their quota, non-payment of dues and settlement of disputes and claims on quality, quantity or terms of the gas sales and purchase agreement.

Terming the marketing margin as illegal, the Anil Ambani group firm Reliance Infra had first refused to pay the levy prompting RIL to issue a notice for suspension of fuel supply for “default”.

Joining the issue with Reliance Infra, the state-owned NTPC also asked the power ministry to seek a specific confirmation for the levy charged by RIL from the petroleum and natural gas ministry.

NTPC has sought to know whether the margins levied by RIL had government’s approval.