OilMin summons RIL, consumers to discuss extending gas sales

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The Oil Ministry has summoned Reliance Industries and consumers who use its KG-D6 gas for a meeting later this week to decide on extending sales contract beyond March 31.

RIL's five-year contracts to sell eastern offshore KG-D6 gas to fertiliser units, LPG extraction plants and power stations ends on March 31.

The company had proposed to sign new contracts with the users on revised higher gas prices that were to come into effect from April 1 but the move has been scuttled as Election Commission on Monday asked the government to delay raising prices until the completion of elections.

Sources said the ministry has called officials of RIL, Fertilizer Association of India, state gas utility GAIL and Association of Power Producers to discuss extension of Gas Sale and Purchase Agreements (GSPAs).

Deferring the new price regime by a few months will not have a material bearing on 85 per cent of the gas produced in the country. Firms such as ONGC will continue to sell gas at USD 4.2 per million British thermal units (mmBtu).

However, the government has to decide on the gas produced from KG-D6 fields. RIL's sales contracts expire at the end of the month.

Sources said a directive could be issued to RIL to sell gas on existing terms to government-identified customers until further orders.

RIL is allowed to sell gas from KG-D6 only to customers identified by the government. It supplies 12-13 million standard cubic meters of gas a day to 16 fertiliser units under contracts that expire on March 31.

Sources said after the EC's directive, the government has decided leave implementation of the Rangarajan pricing formula, which would have hiked gas prices to about USD 8.3 per mmBtu, to the new government.

The formula had been criticised in several quarters, including user industries such as fertiliser and power, for incorporating the cost of importing gas (LNG) in determining rates for domestically produced gas.

The decision to hike gas prices, which was keenly sought by RIL and its partner BP plc of the UK, was opposed by the Aam Aadmi Party, which alleged that it was taken to favour the Mukesh Ambani firm.

AAP leader Arvind Kejriwal, during his brief stint as Delhi Chief Minister, had ordered an FIR against Moily, RIL head Ambani and others for allegedly conspiring to double gas prices and asked the EC not to approve the revision.

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