RNRL says gas deal with RIL is for 17 yrs

The Anil Ambani-controlled Reliance Natural Resources (RNRL) said the price at which it would buy natural gas from Reliance Industries (RIL) reflects an arrangement for take-or-pay gas contract for a period of over 17 years and cannot be compared with spot price of shorter term contract prices.

Also the rate determined was through international competitive bidding process. The price of gas under the agreement between RIL and RNRL is the same as the price for gas supply by RIL to the government owned National Thermal Power Corporation (NTPC), the company said in a statement.

The RNRL statement was in response to media reports that the government has opposed the sale of natural gas by RIL at $2.34 per million British thermal unit (mbtu) saying the artificially low price would lead to a revenue loss to the exchequer.

"The arrangement between RIL and RNRL for the sale and purchase of gas was made at the same time as the award of the gas supply contract by the government-owned company NTPC to RIL. Accordingly, the price of gas under the agreement between RIL and RNRL is the same as the price for gas supply by RIL to NTPC," RNRL said.

RIL is to supply 28 million standard cubic metres per day of gas from its Bay of Bengal fields to RNRL for the Dadri power project in Uttar Pradesh for $2.34 per mbtu. Added to this, $0.12 per mbtu would be for marketing and another $0.72 per mbtu would be charged as cost of transportation.

The delivered price, without taxes, came to $3.18 per mbtu. The contract price is the same as the price bid by RIL in an international competitive bidding process for supply of gas to NTPC for the proposed expansion of its Kawas and Gandhar power plants, RNRL said.

Reliance has offered gas to NTPC at $2.70 per mbtu plus $0.48 per mbtu for piping the gas from Kakinada to Gujarat, a distance of 1,400 km. The delivered price came to $3.18 per mbtu.