Reliance faces 40 per cent cut in margin

New Delhi: Reliance Industries is facing a 40 per cent cut in the marketing margin it charges on selling its KG-D6 gas to fertilizer and LPG plants after the government notified a ceiling of Rs 200 per thousand standard cubic meters (scm).

RIL was charging $0.135 per million British thermal unit as margin to hedge marketing risks on sale of its eastern offshore KG-D6 gas. This is over and above the gas price of $4.24 per mmBtu. Pursuant to the Cabinet decision of November 18, fixing a maximum marketing margin that firms can charge on selling all domestically produced natural gas to fertilizer and LPG plants, the oil ministry has issued a Gazette notification fixing the levy at “a maximum of Rs 200 per thousand scm (on Net Calorific Value of 10,000 Kcal/scm).”

The marketing margin being fixed at NCV basis on 10,000 Kcal will at current foreign exchange rate translate into a levy of $0.79-0.8 per mmBtu, officials said. Had the government fixed the margin at 8,300 Kcal, the margin would have come to $0.85 per mmBtu.