New Delhi, March 11 (IANS) The government on Friday clarified that the decision to allow marketing and pricing freedom for gas produced in difficult areas will not apply to Reliance Industries’ (RIL) discoveries in the KG-D6 block unless the company withdrew its legal suit over gas pricing.
“Gas discoveries getting the benefit should be unencumbered of any legal case. Either arbitrations or legal cases should have ended or withdrawn for getting the benefit of the decision,” Petroleum Minister Dharmndra Pradhan told reporters here.
A cabinet panel on Thursday freed gas pricing from the new blocks and existing discoveries which are yet to commence production. However, to protect user industries, it put a price ceiling derived by a formula linked to the weighted average cost of imported fuels.
A clause in the decision has the caveat that if there are pending arbitration or litigation cases pertaining to such assets, the new policy shall only become applicable upon the conclusion or withdrawal of legal proceedings.
Besides the arbitration on gas price, RIL has approached arbitration over the government disllowing costs of $2.3 billion on grounds of shortfall in production.
The difficult areas for which the new pricing norms have now been formulated are defined as those from deep-water, ultra deep-water and high-pressure, high-temperature areas. Such areas were not considered when prices were fixed for normal gas discoveries in October 2014.
The bulk of such fields are with Reliance Industries and state-run Oil and Natural Gas Corp.
“The marketing and pricing freedom will be applicable to existing discoveries where arbitration or litigation exists directly on gas price, only after conclusion or withdrawal of such processes,” Additional Secretary, Petroleum, U.P Singh told reporters here on Friday while making a presentation on the cabinet decision.