Power ministry & NTPC slam RIL's marketing margin

Power ministry & NTPC slam RIL's marketing margin

“Normally, marketing margins are paid where there is a whole-seller, a distributor and a retailer. But in this case of RIL, there is no whole-seller or retailer. It is a one-man show, one company is doing that,” Power Secretary H S Brahma told reporters here.

RIL is charging US$0.135 per million British thermal unit marketing margin on sale of gas from its eastern offshore KG-D6 fields, a levy which was opposed by state-run NTPC. Anil Ambani Group firm Reliance Infrastructure, which buys 0.56 mmscmd of KG-D6 gas, paid marketing margin on gas till last month but discontinued it this month saying they were ‘illegal and unauthorised’, prompting RIL to slap a notice of discontinuing supplies.

Govt confirmation

NTPC this week signed pacts to buy 0.61 million standard cubic meters per day of gas from KG-D6 fields at US$4.20 per million British thermal unit price plus US$0.135 per mmBtu marketing margin. It has, however, sought specific confirmation on payment of the levy from the government.

RIL says the marketing margin it charges is uniform for all the 40-odd customers and is lower than US$0.17 per mmBtu margin charged by state-run GAIL. Further, NTPC in a letter to the Power Ministry said it had sought legal opinion on Oil Ministry’s advice that marketing margin was purely a commercial issue between the seller and the buyer.

The legal opinion stated that “this issue is a commercial issue and NTPC would need to look at it accordingly... NTPC should take up the issue of marketing margin separately through the Ministry of Power with the appropriate authority in the Government.”

“It is requested that the matter may kindly be taken up with the petroleum ministry or the empowered group of minister (EGoM) so as to obtain specific confirmation on the applicability of marketing margin over and above the gas price,” NTPC wrote to the Power Ministry.

NTPC also cited a Petroleum Ministry letter that stated that “the government has not, till date, fixed or approved the quantum of marketing margin on sale of natural gas by any contractor. The issue may be discussed with the seller as part of the settlement of the terms and conditions of GSPA.”

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