RIL margins to cost Rs 10k cr more on fert, power cos: RPower

Anil Ambani group firm Reliance Power today alleged that Mukesh Ambani-led Reliance Industries (RIL) was charging unauthorised margins on sale of gas to power and fertiliser units imposing an additional burden of Rs 10,000 crore on them and sought immediate intervention of the government.

"RIL is charging an illegal and unauthorised marketing margins of 13.5 cents (Rs 6.6) per million British Thermal Units (mmBtu) on sale of gas from KG basin D6 fields...RIL's decision to levy this margin does not have the approval of the Empowered Group of Ministers," Reliance Power Chief Executive Officer J P Chalasani said in a statement.

While no comment could be obtained immediately from RIL, the allegations come amid the legal battle between the group firms of two brothers Anil and Mukesh over supply of gas to RNRL from RIL's Krishna-Godavari basin.

Dubbing the margins as "illegitimate and unjustified", Chalasani said these would result into an additional burden of Rs 10,000 crore on power and fertiliser consuming units.

"The major burden will be borne by government of India in the form of fertiliser subsidies and governments of Andhra Pradesh, Maharashtra and Gujarat in the form of power subsidies," he said.

The group firms of the two brothers have approached the Supreme Court on a Bombay High Court ruling, which upheld that the Anil Ambani group company RNRL would get gas at $2.31 per mmBtu, 44 per cent lower than the price fixed by the government. The apex court will commence hearing on October 20.

Chalasani said the Petroleum Ministry has denied giving permission to RIL to charge any marketing margin but it is taking no steps to prevent the "illegal levy".

This, he said, "once again strengthens the apprehensions about the biased and partisan approach of the Petroleum Ministry".

Seeking urgent intervention of the government to stop the levy, he said, "The marketing margin already imposed should either be refunded or adjusted against the future sale of gas."

Based on the higher sales price, the government should get a higher share of profit in addition to the royalty as per the production sharing contract, Chalasani said.

"Shockingly, even this is not happening and the entire benefit of Rs 10,000 crore is going to RIL alone," he said.

The Reliance Power CEO said that RIL was "hoodwinking" the Central government and the people of India to "enrich its own coffers".

On the one hand, the government is denied its share of additional sales realisation generated by RIL, and on the other the government has to eventually pay for additional burden in the form of additional subsidies, he said.

Under similar circumstances, state-run GAIL is not permitted to charge any marketing margin on supply of gas to the consumers. "This once again shows the double standard being adopted by the Petroleum Ministry."

He said, there was no element of marketing involved and the margins were unjustified.