ET: Authorities endorse RIL's CBM pricing formula

The directorate general of hydrocarbons (DGH) has endorsed Reliance Industries' pricing formula for coal bed methane (CBM) from its Madhya Pradesh blocks but raised two queries that could further delay the pricing approval. 

Reliance had invited price bids from potential CBM customers. The oil ministry has to check whether these customers are not affiliated to the company in any way so that the prices are fairly determined. The company received 73 bids, of which 59 were valid. 

"Out of 73 bids received by contractor (RIL), 70 seem to be unrelated and by non-affiliated parties and, therefore, appear to be at arm's length," DGH said in a letter to the oil ministry, reviewed by ET. It has, however, remarked that Reliance's reason for considering only 31 out of 59 valid bids was not clear and the company did not calculate gas price for all valid bids in its application to the government. MORE