RIL under CVC lens for levy on KG-D6 gas | business | Hindustan Times
Today in New Delhi, India
Jul 28, 2017-Friday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

RIL under CVC lens for levy on KG-D6 gas

After a rap on the knuckles from CAG, Mukesh Ambani's Reliance Industries Limited is now under the scanner of the Central Vigilance Commission over the gas that it supplies from its KG-D6 block to fertiliser companies. Anupama Airy reports. Gas attack

business Updated: Sep 13, 2011 22:40 IST
Anupama Airy

After a rap on the knuckles from government auditor Comptroller and Auditor General (CAG), Mukesh Ambani’s Reliance Industries Limited (RIL) is now under the scanner of the Central Vigilance Commission (CVC) over the gas that it supplies from its KG-D6 block to fertiliser companies.

The CVC's investigations pertain to the marketing margins that RIL is charging for its KG-D6 gas.

The petroleum ministry has meanwhile said the "government only approves the basic price of gas at the point of exit from the production facility", at which the CVC, in its letter dated September 1, has sought "the authority, policy document and relevant extracts of the NELP (the policy governing exploration and production of oil and gas from the blocks given to private sector)".http://www.hindustantimes.com/Images/HTEditImages/Images/14_09_biz2.jpg

While RIL’s spokesperson refused any official comments, an August 24 letter by RIL’s vice-president B Ganguly to the petroleum ministry justified the levy that the company is charging, and said marketing margins are always charged on top of the ‘delivered’ or ‘landfall’ gas price and must be settled between the seller and the buyer based on the Gas Supply and Purchase Agreement (GSPA).

Reliance was already fighting the marketing margins issue with the oil and gas regulator (the Directorate General of Hydrocarbons) which refused to approve RIL’s accounts for 2009-10 over the issue.

On every unit of KG-D6 gas sold by Reliance, the company is charging a marketing margin of $0.135/unit from its customers in the power stations and fertiliser sector. The final price of RIL’s KG-D6 gas after including the marketing margins for KG-D6 gas for the core sector consumers is thus $4.335 per unit — as against the government approved $4.2 per unit.

As RIL’s accounts have taken $4.335 as the unit cost price of gas, the DGH has refused to clear its accounts.

The CAG, in a report released last week, had accused Reliance of violating the production sharing contract (PSC) with the government for its KG-D6 gas block — a charge which the company has strongly refuted.