Government stands by $4.2/mmBtu base price for RIL gas

The government today informed the court that the $4.2 per million British thermal unit (mmBtu) base price fixed by the empowered group of ministers (EGOM) for gas sales from Reliance-operated Krishna-Godaveri basin fields in the east coast is uniformly applicable to all sectors.

While the base price approved by the government in both cases - NTPC and RNRL - has been $4.2 as stipulated in article 21.6.2 in the PSC, all PSUs and other government nominees are eligible to get gas at the government-approved price, the government counsel Harish Salve informed the court.

The government has the right to sell gas as per its marketing priorities. Priority of allocation is also set by the government as per its gas utilisation policy, he pointed out.

He also prayed that the injunction on gas sales be lifted to facilitate supply to the under supplied PSUs.
 
The government counsel cited article 21.6.2 B of the EGOM report, which states that gas from the KGD6 basin should be dealt at arms length and ''arms length pricing as approved by the government is $4.2.''

''In the case of NTPC the EGOM decision was made under the same provisions of the PSC and it states (21.6.2.B) that the contractors has the freedom to market the gas only on the approved prices by the government under the EGOM and the EGOM price is uniform for all sectors,'' he said.
 
The judge, meanwhile, sought clarification on the whether the government would want to supply all the wholly-owned and partially owned PSUs at $4.2. To this, the counsel replied that all government nominees and Puss, including NTPC, will receive the gas at not less than $4.2 which is the recommended EGOM price for the gas.

The government also clarified that the price of $4.2 is not absolute as it will be revised every five years and on the basis of international crude equivalent prices.