Business Standard

LNG firms' profits may dip

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Siddharth ZarabiVishaka Zadoo New Delhi
LNG firms' profits may dip
Siddharth Zarabi & Vishaka Zadoo / New Delhi February 09, 2006
Tariff commission for capping LNG margins at 1 per cent.

In what may erode the profits of companies like Indian Oil, GAIL and Bharat Petroleum, the tariff commission has recommended a trade margin of one per cent on the sale of regassified liquid natural gas (R-LNG).

Currently, this margin stands at 2.5 per cent based on a jointly adopted principle by the three companies.

The recent final tariff commission report on pricing of cost components for regassification, transportation tariff and marketing margin for R-LNG follows a decision of an inter-ministerial group headed by finance minister P Chidambaram.

This may also have an impact on private gas players and those who purchase gas from the intermediary off-takers.

As per the calculations of the oil marketing companies, the 1 per cent margin roughly equals Rs 1.97 per million British thermal units (mmbtu). This has the companies all worked up.

In fact, Indian Oil Chairman S Behuria shot off a letter to Petroleum Secretary MS Srinivasan on the issue. Bharat Petroleum had also opposed this recommendation, a top company executive told Business Standard.

Behuria

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First Published: Feb 09 2006 | 12:18 AM IST

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