Reliance Infra wants EGoM to decide on marketing margin on D6 gas

Anil Ambani-owned Reliance Infrastructure has again raised the issue of marketing margins being charged by Reliance Industries Ltd on sale of gas from the D6 block in Krishna Godavari basin. It has asked the ministry of power to take up the matter in the meeting of empowered group of ministers that is scheduled for Tuesday.
 
Reliance Infra had entered into a Gas Supply Agreement (GSPA) on April 27, 2009 with Reliance Industries for the purchase of gas for its 220 Mw Samalkot plant in Andhra Pradesh. RIL is currently charging a marketing margin of 13.5 cents per million British thermal unit (mBtu) in addition to the base price of $4.2. The two companies had last month fought over the issue with RIL cutting gas supply to the plant.
 
The supply was subsequently reassumed with Reliance Infra agreeing to pay margin “under protest”. It now wants the issue to be resolved by the EGoM that has recently been constituted for deciding on the commercial utilisation of gas. “RIL should be directed to immediately put a stop to this illegitimate levy of marketing margin from all customers of KG Basin gas and refund the marketing margin wrongfully collected so far,” Reliance Infra CEO and director Lalit Jalan said in a letter to Union Minister of Power Sushilkumar Shinde.
 
It said the margin was charged in defiance of the decision of EGoM taken on September 12, 2007 though the ministry of petroleum has so far maintained that the government had nothing to do with the issue and the marketing margin was a matter between the buyer and the seller. The EGoM's role is confined to making allocation of additional quantity of gas that will be produced by D6. It will skip the issue of pricing since that has been fixed for a period of five years starting April 1, 2009.
 
Terming the margin as “unauthorised”, the letter said if paid by the power companies, it would lead to higher cost of generation for gas based plants affecting the viability of power generation and hence should be immediately stopped.
 
Anil Ambani group company Reliance Natural Resources Ltd is fighting a case against RIL in the Supreme Court on sale of natural gas to its Dadri plant in Uttar Pradesh at a price of $2.34.