Centre pulled up for letting RIL sell gas in dollars

The Comptroller and Auditor General (CAG) on Tuesday criticised the Petroleum Ministry for allowing Reliance Industries Ltd (RIL) to charge a marketing margin on its KG-D6 gas in US dollars.

The CAG also said this led to the exchequer paying out an extra Rs 201.40 crore on urea subsidy.

The marketing margin for GAIL was fixed in Indian rupee, whereas the contractor, RIL was charging it in US dollars, the CAG has said in its report, which was tabled in Parliament.

“Charging of marketing margin for KG-D6 gas in US dollars instead of Indian rupees for a commodity produced, marketed and consumed domestically is incongruous with the Indian market,” said the CAG in the report.

It added that the exchange rate fluctuations meant that the margin rose from Rs 244.31 per million standard cubic metre (mscm) in 2010-11 to Rs 325.51 per mscm in 2013-14.

“Additional impact of charging of marketing margin by the contractor on 15 mscm per day of KG-D6 gas (supplied to fertiliser units on an average) in excess of marketing margin allowed to GAIL, from May 2009 to March 2014, works out to Rs 201.40 crore,” said the CAG report.
“Subsidy claims on account of marketing margin on KG-D6 gas was kept pending from 2009-10, that is, since the beginning of supplies by the contractor,” it added.

“The Ministry of Petroleum and Natural Gas should ensure that the same methodology, that is, charging the marketing margin in Indian rupee, is adopted for supply of natural gas from domestic source for use in sectors where the government bears subsidy burden,” said the report.

Currency conundrum

* Govt body GAIL charges marketing margin in rupees, but contractor RIL charges it in dollars
* Exchange rate fluctuations have led margin to rise from Rs 244.31 per mscm in 2010-11 to Rs 325.51 in 2013-14
* As a result govt paid Rs 201.40 crore extra from May 2009 to March 2014
* CAG recommends that govt should pay marketing margin only in rupee for supplying gas domestically to sectors where it bears the subsidy burden