RIL's K-G gas overpriced, moan fertiliser companies

With Reliance Industries almost set to start pumping the much-awaited gas from the Krishna-Godavari basin, battles over allocation and pricing are reaching a fever pitch. Now, fertiliser companies have protested against an increase in 'marketing margin' to be levied by the Mukesh Ambani-controlled company.

The 12 fertiliser companies that have already been accorded top priority for K-G gas by the government are cribbing that the draft of the agreement is heavily loaded in favour of the Mukesh Ambani-controlled RIL, and puts conditions that do not suit Indian entities. They have baulked at the revised draft as, it raises the margin to 15 cents per mBtu (million British thermal unit) from 12 cents.

The margin is proposed to be charged in addition to the base price of over $4 mBtu set according to the formula approved by the government, and an upward revision will push up the final price.

Reliance said it had raised the marketing margin as it has accepted the additional burden of compensating users in case of failure of supply. The company has said it will compensate users for the charges they may have to pay to pipeline transport undertaker Reliance Gas Transportation India in case of default in supplies.

In a letter to fertiliser secretary Atul Chaturvedi, the Fertiliser Association of India had sought government intervention in the matter. The letter had raised eight objections to the draft agreement, the major ones being: seeking option of payment in dollars in an offshore account; no liability on RIL in case of short-supply and restricting the source of gas to only two fields instead of the entire D6 acreage.

However, The Economic Times reports that the two sides have considerably narrowed their differences and are likely to sign the soon. The delivered price, including taxes and transportation charges, of Reliance gas in Andhra Pradesh would be $5.34 per mmBtu while in Maharashtra it would cost $5.87. In Gujarat it would cost $ 5.87, and along the HVJ pipeline, the price would be $6.21, according to a report.