RIL is presently selling gas...

The reason given by policy makers stands that the agreement was not in accordance with other competitive sale prices at which the gas is being supplied under similar conditions in the same region where RIL is currently operating. RIL is presently selling gas (from its Panna/Mukta and Tapti fields) that is priced at $4.75 per million British thermal units (mBtu), which is much higher than the proposed price of $2.34 per mBtu by RIL for sale to RNRL. Internationally, the price of gas hovers around the $10 per mBtu. The Petroleum Ministry argues that the price discovery process should come about after a transparent competitive bidding process. And also that family agreements cannot guide a contract against public interest. The Anil camp is expectedly crying foul, stating that the RIL-NTPC deal is also based on price levels below $4.00. Clearly, RNRL officials are concerned about having to pay higher prices for gas, which would logically mean much higher prices to be paid by RNRL and would completely change the economics of the Dadri project that the group is banking heavily on!

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Editor: Arindam Chaudhuri

Source: IIPM Publication and Business & Economy


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