Against the backdrop of the next EGoM (empowered group of ministers) meeting, the MoP&;NG (ministry of petroleum and natural gas) has washed its hands off an issue raised by the DoF (department of fertilisers) regarding unfairly high marketing margins charged on KG-D6 gas sold by RIL and Niko, the joint owners of this block. The petroleum ministry said that marketing margins on sale of natural gas have to be decided upon between the buyer and seller alone and the government had no part to play in this regard.- The DoF had asked the petroleum ministry to justify marketing margins of $0.135 per mmbtu being charged for KG-D6 gas. It had also questioned the admissibility of marketing margins being charged to the fertiliser plants which were supposed to be accorded the highest priority when it came to natural gas allocations in the country.
- However, the petroleum ministry said that the government could only fix the price of gas at the delivery point specified in the production sharing contract (PSC). The final price charged to customers would also include charges such as transportation tariffs, taxes and marketing margins. Government regulations do not provide for fixing of marketing margins on sale of gas.
- The ministry further mentioned that the issue of marketing margins was part of the settlement of the terms and conditions under each GSPA (gas sale and purchase agreement) which was signed by individual buyers and sellers.
- It was also pointed out that comparable marketing margins were also being charged on other categories of gas, apart from NELP gas. The details on these, as laid out by the petroleum ministry, are as follows:
- RLNG: $0.19 per mmbtu, along with annual escalation at the rate of 5% per annum.
- Ravva satellite gas: $0.11 per mbtu
- PMT JV gas: $0.13 per mmbtu
- APM gas: $0.112 per mmbtu
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