The government has determined to provide gas at regulated rates solely to a number of top-priority shoppers - a move that may grant Reliance Industries substantial pricing freedom and boost the government's share of revenue from the KG-D6 field when output rises. The new system is being puzzled out by the govt in response to the steep fall in output from Reliance Industries KG-D6 gas field.
The shortfall has prompted the oil ministry to order Reliance to chop provides to "non-core" sectors like steel to assist power and fertiliser plants get traditional provide. Steel firms have already challenged the order in court, however the proposed new pricing policy can check that that such customers pay market rates for gas when it's out there. Reliance Industries needs to observe information from the D-6 reservoir for a number of quarters before it takes steps to ramp up production to traditional. In the new pricing regime, gas at the regulated worth of $4.2 per unit would be provided just for use in creating fertilisers, subsidised cooking gas, town gas networks and power stations that don't from lucrative open-market sale, 2 government officers said requesting anonymity. Natural gas could be a scarce commodity in India, and therefore the solely fast different to Reliance's gas is liquefied natural gas (LNG) that has been imported at over $12 per unit within the spot market in recent weeks. If Reliance is ready to ramp up output to traditional, a minimum of 1/2 its identified customers would be denied low-cost gas on the grounds that the government's pricing policy shouldn't boost company profits with none gains for the general public. The officers said that a steep decline in RIL's KG-D6 gas output had forced the govt to limit its provide to priority sectors and had conjointly raised the question on why low-cost gas ought to be given to firms for maximising profits.
The RIL-operated block's current output is concerning 48-49 million customary cubic meters per day (mmscmd) that is well wanting sixty nine.8 mmscmd as per the govt approved arrange. The oil ministry has the authority to limit gas provide to non-core industries immediately however the problem of gas costs is taken up solely by the empowered cluster of ministers (EGoM), officers said. The EGoM, that is that the final word on gas pricing and its utilisation, had chalked out priority shoppers for RIL's KG gas and had fastened its worth at $4.2 per unit for 5 years that might expire in two014. Oil ministry officers confirmed the developments.
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