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RIL to Up Marketing Margin on Coal-Bed Methane

  • While the government has sent RIL's $0.135 marketing margin on the sale of KG-D6 gas to the oil regulator for approval, the Mukesh Ambani-led company has proposed to charge a $0.15 levy in lieu of marketing costs on the sale of gas produced from coal seams . In newspaper advertisements issued on Friday calling for bids to purchase 3.5 million cubic metres a day of coal-bed methane (CBM) it plans to produce from its Sohagpur block in Madhya Pradesh by 2014-end, RIL said it will charge $0.15 per million British thermal units as a marketing margin over-and-above the gas sale price.
  • The Oil Ministry had on December 26 referred the $0.135 per mmBtu marketing margin RIL charges over-and-above the KG-D6 gas sale price of USD 4.205 per mmBtu to the Petroleum and Natural Gas Regulatory Board after the levy was questioned by users like the fertiliser industry. "The government of India hereby entrusts the determination of the quantum of marketing margin chargeable on sale of natural gas to end-consumers by each marketing entity on the basis of its actual marketing cost to the PNGRB," the ministry stated in its letter to the regulator. RIL had originally proposed a $0.15 per mmBtu marketing margin for KG-D6 gas to cover risks like seller liabilities in case of non-supply, customers drawing less than their quota, non-payment of dues and settlement of disputes, but later agreed to a charge of $ 0.135 per mmBtu.

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