Reliance Industries to charge KG-D6 gas consumers on revised terms from April

PTI Posted online: Monday, Mar 24, 2014 at 0000 hrs
New Delhi : Reliance Industries today said it will from next month charge consumers of its KG-D6 gas on changed terms as the gas pricing formula to be implemented from April has components that will result in rate on gross calorific value basis.

RIL currently charges consumers the government fixed rate of USD 4.205 per million British thermal unit on Net Calorific Value (NCV) basis. One Gross Calorific Value (GCV) equals to 0.9 NCV and so on a like to like basis consumers will have to pay 10 per cent more price if billed on GCV basis rather than on NCV.

"The components in the Cabinet Committee on Economic Affairs (CCEA) approved Rangarajan price formula include Henry Hub price in USA, NBP price in UK and net back of LNG prices to Japan and India. Since the pricing of all these components are on GCV basis, naturally the resultant price is also on GCV basis," the company said in a statement.

The Rangarajan formula of pricing natural gas at an average of international hub rates and actual cost of importing LNG into India does not specify pricing the fuel on GCV or NCV basis. Currently, almost all domestically produced gas is priced on NCV basis.

Stating that the company would not charge higher than the price approved, it said, "RIL does not propose to apply any factor of increase or decrease to the price approved as per the Rangarajan price formula."

"RIL has forwarded Gas Sale Purchase Agreement (GSPA) to fertilizer customers since the existing GSPA is valid till March 31, 2014. Since the new GSPA is under discussions, to facilitate gas supply from April 1, 2014, RIL has also forwarded a GSPA term sheet which will be valid till the new GSPA is finalised between the parties. The GSPA term sheet is currently under discussion with the buyers," RIL added.

It said that in the GSPA term sheet, RIL has proposed that buyers pay price approved by the government under the provisions of the Production Sharing Contract (PSC).