New gas rates to be applicable from April 1: RIL

New gas rates to be applicable from April 1: RIL

New gas rates to be applicable from April 1: RIL

In a fresh worry for fertiliser plants, Reliance Industries has written to fertiliser plants that it will charge them new rates for natural gas from a retrospective date of April 1, no matter when the rates are approved. Prices according to the new formula are likely to be $8.3 per unit.

Urea manufacturing plants, on the other hand, are eagerly awaiting a decision from the oil ministry on the gas price row. Oil Minister Veerappa Moily has not yet decided whether the new prices will be effected retrospectively or from the date a decision is taken.

RIL has already initiated arbitration process against the government after delay in notifying the gas price applicable under the Domestic Natural Gas Pricing Guidelines, 2014.

It has conveyed this to urea manufacturers saying the company is supplying about 12.5 million standard cubic meters of gas per day to them from April 1 at a provisional rate of $4.2 per mmbtu. But it will charge them the difference between provisional rate and the new rate as and when gas prices are approved.

"The gas price payable for the supplies received by you from April 1, 2014 onwards shall be the price as may be made applicable from such date by virtue of a notification by the government or the outcome of the arbitration," it said.

The Cabinet had last year approved a new formula for pricing of domestically produced gas from April 1. However, the oil ministry had approached the Election Commission if it could go ahead with the new rates when the code of conduct was in force for General Elections 2014, to which the EC said no and blocked the implementation of the Rangarajan formula, which would have doubled gas prices to about $8.4 per unit from April 1.

Now, the officials of oil ministry have said that the the gas price row may be decided by the government on April 17, once the election process is over. Now, a fresh cabinet approval is needed on whether the new rates can be approved retrospectively. It is still unclear whether Moily will be able to move the matter to the Cabinet since the cabinet has already had its last working meeting on Tuesday, May 13.

In this case, the gas price row may also be left for the new government to decide on. As far as the officials of the ministry are concerned, they are of the view that the fertilisers companies should not be charged retrospectively and they have also put forward their view to the minister.