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RIL wants cos to pay ?new? gas price

Writes to fertiliser companies, asking them to pay the price ?effective from April 1?

Reliance Industries (RIL), now supplying gas to fertiliser companies under an interim arrangement, has written to them, seeking to ensure that it gets the differential between the ?previous price? of $4.2/mmBtu, applicability of which expired on March 31 and the ?price effective April 1?. This means that the company wants the fertiliser units to pay the new gas price ? which the new government will likely notify ? with retrospective effect from April 1, even as the units now pay $4.2 only.

?These (terms and conditions for the interim supplies) include your providing us the security for payment for the differential between the previous price which has come to an end on March 31, 2014, and the price applicable effective April 1, 2014,? RIL wrote to the Fertiliser Association of India.

Implementation of the new gas price, based on the Rangarajan formula, is stuck as the Election Commission asked the government to put it in abeyance until the polls are over. Although RIL sent a revised gas pricing agreement (GSPA) to fertiliser units for supplies from April 1, it could not be enforced due to the EC diktat but in order to ensure supplies to the fertiliser companies are not disrupted, the government initiated an interim mechanism.

Fertiliser companies are not happy with the new communication from RIL. ?How can we accept a contract where the government itself has not discovered the price? We don?t know weather the price will be increased or not. RIL is dictating its own terms which are totally unjustified,? an FAI official told FE.

RIL had signed GSPAs with 16 fertiliser units for sale of gas from KG-D6 in 2009 that expired on March 31, 2014. The fresh GSPA draft from RIL comes even as its earlier proposal on renewing fuel contract with the fertiliser units met with strong opposition.

In its earlier draft issued last month, the company proposed revision of the gas prices on quarterly basis instead of fixing it for a 5 years tenure. This, however, was rejected by the fertiliser sector.

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First published on: 10-04-2014 at 03:38 IST
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