NTPC seeks confirmation on marketing margin from RIL

State-run NTPC has asked the Power Ministry to seek confirmation from the Oil Ministry/EGoM on payment of marketing margin, on the gas it will buy from Reliance Industries, even though it has agreed to pay the levy.     

NTPC after months of dithering this week signed pacts to buy 0.61 million metric standard cubic meters per day (mmscmd) of gas from RIL's KG-D6 fields at $4.20 per million British thermal unit (mBtu) price plus $0.135 per mBtu marketing margin.     

The company, which was opposed to paying marketing margin, on September 23 wrote to Power Ministry saying NTPC's board while approving signing of the Gas Sale and Purchase Agreement (GSPA) with RIL had decided to take up the matter of marketing margin separately with the appropriate government authority.     

NTPC said it had sought legal opinion on Oil Ministry's advice that marketing margin was purely a commercial issue between the seller and the buyer.     

The legal opinion stated that "this issue is a commercial issue and NTPC would need to look at it accordingly... NTPC should take up the issue of marketing margin separately through the Ministry of Power with the appropriate authority in the government."     

The move comes amid the tussle between Ambani brothers on the issue which had Mukesh Ambani-run RIL slap a notice for discontinuing supplies after younger brother Anil Ambani Group company stopped paying the levy on gas it buys from KG-D6.

"It is requested that the matter may kindly be taken up with the Ministry of Petroleum and Natural Gas or the Empowered Group of Minister (EGoM) so as to obtain specific confirmation on the applicability of marketing margin over and above the gas price," it wrote.     

NTPC said it had discussed the issue of marketing margin with RIL during finalisation of the GSPA.

"However, RIL maintained its position that marketing margin is being charged by them from all the (40) customers on a uniform basis and RIL is not in a position to create any exception for NTPC."     

NTPC cited the Petroleum Ministry's letter that stated that "the government has not, till date, fixed or approved the quantum of marketing margin on sale of natural gas by any contractor. The issue may be discussed with the seller as part of the settlement of the terms and conditions of GSPA."