RIL's KG D6 Gas Price Hike Request Rejected

India’s oil ministry has rejected RIL's request for revising price of gas from the company's KG D6 field before the due date of April 1, 2014, saying the new price being suggested by the company would push up the government's subsidy burden by $6.3 billion, Times of India reported. 

RIL has suggested a price of $14.2-$14.5 per unit, up from $4.2. The current price was set in 2007 for five years from start of production. RIL has argued that the price suggested by it is the same as that of gas being imported in ships by Petronet LNG or piped supplies being proposed from Turkmenistan. It has cited rising operational costs and market conditions to justify its demand, the newspaper report said. 

The ministry note counters by saying that at current production level of 25 mcmd (million cubic metre per day), the government would get only $0.5 billion more in the time left till a revision is due. In contrast, RIL's take would rise by $4.1 billion during the same time. Besides the impact on subsidy, higher RIL gas price would also impact power and CNG tariffs.