NEW DELHI: The government has directed users of gas produced from the Reliance Industries (RIL)-operated KG-D6 gas field to pay the old rate of $4.20 a unit to the producer and deposit balance $1.41 a unit in a gas pool account operated by state-run GAIL India . The Cabinet last month approved a new gas pricing formula, which raised the domestic gas price from $4.20 a unit to $5.61 from November 1. It had, however, directed the oil ministry to credit the difference between the revised price and the old price to a gas pool account, pending final verdict of an ongoing arbitration between RIL and the government.A GAIL India spokesman confirmed about the government directive. “The invoices would be raised by the sellers. The differential price worked out as per the guidelines would be paid into the gas pool account,” he said. The company declined to give details about the account. “We are complying with the government instructions in this regard,” he said. According to government officials, GAIL will bear all administrative costs related to maintaining the gas pool account.ET reported on November 7 that the government was favourably considering the option of directly transferring the differential amount to the gas pool account as there were legal or technical hassles in other two options.One option that was proposed by the contractor was to allow it to collect the entire sales proceeds and then deposit the differential amount in the gas pool account.The other option was to ask GAIL to collect gas revenues, pay RIL as per the old rate and keep the differential in the gas pool account, officials said. There could be legal problems with the first option because RIL had filed arbitration cases against the government over various disputes related to KG-D6, and allowing it to collect the entire sum could weaken the government’s stand. The second option was technically cumbersome as customers have signed contracts with RIL and not GAIL, so the public sector company could not collect revenues without changing the contracts, they said.The Cabinet on October 18 decided that RIL should wait for the final verdict before getting new rates for gas produced from its controversial D1 and D3 fields. This is because the arbitration is over the government’s power to prevent RIL from recovering its costs on account of a shortfall in production targets. While the production sharing contract allows the producer to recover costs, the government has disallowed some of the cost recovery on the ground that RIL had failed to produce the promised amount of gas. RIL says the government’s action runs contrary to the PSC.“Hence the operator would be paid the earlier price of $4.2/mBtu till the shortfall quantity of gas is made good. It is proposed that the difference between the revised price and the present price ($4.2 per million Btu) would be credited to the gas pool account maintained by GAIL and whether the amount so collected is payable or not, to the contractors of this block, would be dependent on the outcome of the award of pending arbitration and any attendant legal proceedings,” the Cabinet said on October 18.