New Delhi, April 29 (IANS): The Mukesh Ambani-led Reliance Industries Ltd (RIL) has asked the petroleum ministry to implement the cabinet-approved new natural gas price on May 13, when the election code of conduct will no longer apply after the end of the nine-phased voting in the ongoing Lok Sabha poll.
A senior ministry source told IANS that RIL had written on April 3 that announcing the new rate immediately after the polling code ends on May 12 was "necessary to avoid extended dispute and irreparable loss to all parties to the Production Sharing Contract (PSC)".
Last month, the Election Commission had asked the government to defer announcing the new -- and likely doubled -- price of natural gas produced by companies such as RIL till after the general elections have been completed.
The new gas price approved by the cabinet and based on a formula suggested by the C. Rangarajan Committee would result in a doubling of the current rate of $4.2 per unit, that for RIL gas expired on March 31 after its five-year contractual term.
Pointing out that the company continues to sell gas at old rate on a "provisional basis", RIL has written that whenever the government notifies the gas price effective from April 1, it would recover the price differential from its customers, the source said.
The government's June 2013 approval of the new gas price came with a rider for RIL that permitted the company to sell natural gas at the revised doubled price from April provided it gave a bank guarantee to be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1 and D3) fields in the eastern offshore KG-D6 block.
The ministry had in 2012 imposed a penalty of over $1 billion on RIL for failing to produce gas in line with the pre-stated targets. It blamed the company for deliberately suppressing production by not drilling the required number of wells.
RIL has approached for arbitration against the order, saying the fall in output is owing to geological complexities and lower than anticipated reserves.