The Finance Ministry has called for Reliance Industries ( RIL ) to deliver outstanding gas at old price of USD 4.2/ million metric British thermal units, reports Nayantara Rai.
The Finmin also sought to put cap on the increased domestic gas price. This was suggested to the oil ministry because Finmin believes upside in price needs to be capped to control unlimited gains. However companies can reap gains with upswing in global price, sources said.
There was never any talk of having an upward ceiling or a cap. Finance ministry now wants the oil ministry to put an upward ceiling. It believes that gas producers should not reap in all the benefits especially when there is an upswing in global prices and that is something the oil ministry and finance ministry will have to work out.
Also, CNBC-TV18 has accessed the note written by the finance ministry where it says that because of all the technical problems that Reliance Industries has been having, when production goes up, government should ensure that RIL supplies the shortfall in gas at the old price of USD 4.2/mmBtu. It also mentions that RIL is going to be the biggest beneficiary of new price regime and should not benefit from that new price until it delivers all the outstanding gas promised to the government.
An arbitration process between RIL and the government has also been seen. It will be interesting to see how this progresses because finance ministry has also told the oil ministry to reach a logical conclusion with RIL on outstanding legal issues whether it is towards cost recovery or penalty. As far as ceiling is concerned, gas producers in the country will not be happy about it. The talk of a ceiling was unexpected and the plan was to move to a market-linked regime in five years.
The Finmin also sought to put cap on the increased domestic gas price. This was suggested to the oil ministry because Finmin believes upside in price needs to be capped to control unlimited gains. However companies can reap gains with upswing in global price, sources said.
There was never any talk of having an upward ceiling or a cap. Finance ministry now wants the oil ministry to put an upward ceiling. It believes that gas producers should not reap in all the benefits especially when there is an upswing in global prices and that is something the oil ministry and finance ministry will have to work out.
Also, CNBC-TV18 has accessed the note written by the finance ministry where it says that because of all the technical problems that Reliance Industries has been having, when production goes up, government should ensure that RIL supplies the shortfall in gas at the old price of USD 4.2/mmBtu. It also mentions that RIL is going to be the biggest beneficiary of new price regime and should not benefit from that new price until it delivers all the outstanding gas promised to the government.
An arbitration process between RIL and the government has also been seen. It will be interesting to see how this progresses because finance ministry has also told the oil ministry to reach a logical conclusion with RIL on outstanding legal issues whether it is towards cost recovery or penalty. As far as ceiling is concerned, gas producers in the country will not be happy about it. The talk of a ceiling was unexpected and the plan was to move to a market-linked regime in five years.
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