Supreme Court gives RIL 6 weeks to respond on Gas Pricing

The Supreme Court on 16^th January gives 6 weeks time to Mukesh Ambani’s Reliance Industries Limited to respond to the Comptroller and Auditor General of India (CAG) report on the gas pricing from the KG basin.

A bench headed by Justice T S Thakur also allowed Dasgupta and other petitioners to file their response to the NDA government's fresh guidelines which would "supersede" the earlier UPA dispensation's policy on price fixation for natural gas, including that from KG basin, which has been the bone of contention between the Centre and RIL.

According to CAG the company is charging a rate in excess of the government-approved price for its KG-D6 gas field and not including the marketing margin for calculating royalties and government's share.

The Apex court has kept the next hearing on 20^th March during which it would examine the RIL's response to the CAG report that had sought disallowance of $357.16 million (about Rs 2,179 crore) expenditure RIL incurred on drilling of wells and payments to contractors in KG-D6.

On November 14, 2014 the Solicitor General said before the bench which also comprised justices J Chelameswar and Kurian Joseph, that the 'new domestic natural gas policy' was approved by the government on October 18 raising natural gas price to $5.61 per mmbtu from November 1 and had said that "recommendation of the Rangarajan Committee would not be given effect".

Solicitor General Ranjit Kumar said the Centre could make comments on the Comptroller and Auditor General (CAG) recommendations and findings only after getting the report of the Parliament's Public Account Committee that is examining it.

The order was passed during a brief hearing of petitions filed in 2013 by senior CPI leader Gurudas Das gupta and NGO Common Cause, challenging the then UPA government decision to double the price of natural gas from 4.2 US dollar to 8.4 dollar per mmbtu and seeking cancellation of RIL's contract for exploration of oil and gas from the KG basin.

Advocate M L Sharma filed the third PIL on the same issue.

The previous UPA government has approved the Rangarajan formula on gas pricing. Rangarajan was Chairman, Economic Advisory Council to the then Prime Minister.

In October 2007 the government had set sale price of $4.20 per million British thermal units based on the price discovered by RIL from key customers.

The CAG in a draft report of audit of RIL's eastern offshore KG-D6 block spending stated that the company charged $4.205 per mmBtu from consumers, leading to excess billing of $9.68 million.

You can read more news about RIL Gas Pricing here.