GAIL doubles marketing margin on sale of gas

Written by PTI | New Delhi | Updated: Dec 19 2013, 09:40am hrs
GAIL India, the nations biggest natural gas distributor, has doubled the marketing margin it charges from customers on sale of a small volume of gas sourced from state-owned ONGC.

GAIL used to charge R200 per thousand cubic metres (R5 per million British thermal unit) as effort money or marketing margin from consumers such as fertiliser plants and power stations, for selling natural gas sourced from fields that Oil and Natural Gas Corp (ONGC) has got from the government on a nomination basis (called APM gas).

However, a distinction has now been made in the gas produced from fields given to ONGC on the nomination basis. Any gas that came into production after 2010 is being treated differently than APM gas for which the government decides the price as well as the marketing margin.

Gas from the fields of ONGC that came into production after 2010 are being termed as non-APM gas and GAIL has been since November billing a higher marketing margin of R10.21 per mmBtu on such fuel sold to consumers, sources said.

Rashtriya Chemicals and Fertilizers (RCF) and Reliance Industries (RIL) are among the consumers who have got two bills for November quoting the higher marketing margin.

While RCF refused to pay the higher charges, RIL paid the first bill in protest. But when the second bill came, it deducted the higher charges it had paid earlier, they said.

Non-APM gas coming from the nomination fields of ONGC is distributed to consumers by GAIL although a small volume is directly sold to consumers by ONGC itself.

While ONGC has not changed the marketing margin on the volumes it trades directly to consumers, GAIL has been since November billing consumers a higher marketing margin.

GAIL, sources said, has reasoned that the higher marketing margin is on a par with the rate it charges for its effort on sale of gas from western offshore fields of Panna/Mukta and Tapti.

At the time of revising APM gas price to $4.2 per mmBtu in May 2010 (effective June 1, 2010), the oil ministry had directed that the marketing margin of R200 per thousand cubic metres would be charged from customers by the company marketing the gas produced by national oil companies (ONGC and Oil India).

Subsequently, in June 2010, the ministry again clarified that the marketing margin shall be charged by ONGC and OIL in cases where they are directly selling gas to end-customers and, in other cases, the marketing margin would be charged by the companies marketing the gas, i.e., GAIL.