Oil ministry returns RIL’s Rs509 crore bank guarantee
New Delhi: Reliance Industries Ltd
(RIL) had submitted a bank guarantee of Rs509.55 crore to get a higher
price for natural gas it produces from the eastern offshore KG-D6 field,
which the oil ministry has returned, saying the new rate hasn’t been
announced.
The surety, given on 10 April, covers the incremental revenue RIL
would have got in the April-June quarter if the price of gas were to
double to $8.4 per million British thermal units (mbtu).
Sources said RIL provided the bank guarantee even though
the Election Commission had asked the government to defer implementing
the new rate, which was to have come into effect from 1 April, until
completion of the Lok Sabha elections.
The oil ministry returned the guarantee, saying the new
price has not been notified and RIL would have to submit the surety as
and when it is announced. 
An RIL spokesperson did not reply to an email seeking
comment. The cabinet committee on economic affairs (CCEA) approved a new
formula for pricing all domestically produced natural gas in June last
year. In December, it said the new rate will be applicable for the main
field in the KG-D6 block only if RIL submits a bank guarantee equivalent
to the higher revenue it would get from the new gas price. This surety
would be encashed if it was proved the company deliberately suppressed
gas output, depriving RIL of the incremental revenue.
Output at the Dhirubhai-1 and 3 gas fields at about 8
million standard cubic metres a day (mmscmd) is a fraction of the 80
mmscmd output planned for this time.
RIL says geological complexities such as unanticipated
water and sand ingress were responsible for the output drop. However,
the oil ministry and its technical arm Directorate General of
Hydrocarbons (DGH) feel RIL did not drill the committed quota of wells
and slapped a $1.8 billion penalty on the company. They also wanted to
deprive the firm of the higher rate for gas unless it was proved
otherwise.
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