Ministry blocks RIL’s KG-D6 gas price hike plan
RIL pitched for the gas price, post March 2014, to be about 10% below the spot price of LNG imported from Qatar — $12-13 at current rates.
According to sources, during discussions with the government, the fertiliser ministry contended that such a price (on which consumers will have to pay an extra $1-1.5 to cover transporation charges and marketing margins) is not viable for the fertiliser industry whose output is highly subsidised, adding that any such move will cause a burden on the exchequer.
“Globally, the prices of domestically-produced gas are available at very cheaper rates at around $1.5-$4. With the government clearing the new investment policy for fertiliser sector, at least eight new plants are going to set up. If the gas price is fixed at more than $8, it will increase the subsidy bill and put more stress on companies willing to set up plants," a ministry official said.
The gas price from the once-prolific block off the Andhra coast (where the output has seen a sharp decline in the past more than a year) is slated for review by an empowered group of ministers (EGoM) in 2014. The current price of $4.2/mmBtu was fixed in 2007 and implemented from 2009 for a five-year period.
With gas production from KG-D6 block expected to fall further from
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