Reliance Industries KG-D6’s floating production storage and offloading (FPSO) vessel is seen off the Bay of Bengal. (Reuters) Reliance Industries KG-D6’s floating production storage and offloading (FPSO) vessel is seen off the Bay of Bengal. (Reuters)

Reliance Industries has asked Oil Ministry to announce a new natural gas price immediately after polling ends on May 12, saying this was necessary to avoid irreparable loss to all parties, including the government.

While a new formula for pricing of all domestically produced natural gas was notified on January 10 and published in Gazettee on January 17, the Election Commission last month asked the government to defer its implementation till general elections are completed.

The new pricing formula, that almost doubles the price of natural gas to about USD 8.34 per million British thermal unit, was to be implemented from April 1 but following the directive of the poll watchdog, was put in abeyance till model code of conduct for elections is in place.

“… the new price as per the guidelines (approved by the Cabinet twice last year) must immediately be intimated once the model code of conduct is not in force i.e. on May 13, 2014 which is after the last day of polling on May 12, 2014,” RIL President & COO B Ganguly wrote to the Oil Secretary.

RIL said the USD 4.205 per mmBtu price for gas from its eastern offshore KG-D6 field was valid for the first five years of production, which ended on March 31.

But since the poll watchdog deferred implementation of the new pricing, the company continues to sell gas at old rate on “provisional basis,” Ganguly wrote on April 3.

He said immediate intimation of the new rate after poll code ends on May 12 was “necessary to avoid extended dispute and irreparable loss to all parties to the Production Sharing Contract (PSC).”

“Any other course of action would be in violation of the PSC,” RIL said.

RIL has asked fertiliser companies, its sole consumers, to provide payment guarantees at new rate. Fertiliser companies have, however, refused to do so saying no new rate has so far been intimated.

“We are seeking adequate comfort in the Gas Sale Purchase Agreements (through letter of credit or otherwise) to ensure that once the price is notified, we, on behalf of all the parties to the contract, are able to recover the revised price with effect from April 1, 2014,” the company said.

RIL said whenever the government notifies the gas price effective from April 1, it would recover the differential price from its customers.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.