Our Bureau

Mumbai, May 4

Reliance Natural Resources Ltd on Thursday said in a statement that the gas supply agreement between Reliance Industries Ltd (RIL) and Reliance Natural Resources Ltd (RNRL) was an integral part of the scheme of reorganisation of the Reliance group, as approved by over two million Reliance shareholders and the Bombay High Court.

This arrangement between RIL and RNRL for sale and purchase of gas was made at the same time as the award of the gas supply contract by NTPC to RIL, the release said.

Pricing

Accordingly, the price of gas under the gas supply agreement between RIL and RNRL is the same as the price for gas supply by RIL to NTPC, with the gas price being discovered through a process of international competitive bidding. The gas price reflected an arrangement for firm take-or-pay gas contract for a period of over 17 years, which cannot be compared with spot prices or shorter-term contract prices, the RNRL statement said.

Reports on Wednesday had suggested that the Centre was opposed to sale of gas by RIL to RNRL at a wellhead price of $ 2.3 per MBTU even as gas from Panna Mukta fields where RIL is a stakeholder was offered to GAIL at $ 4.8 per MBTU.

Revenue loss

The reports had said that sale of gas by RIL to RNRL at $ 2.3 per MBTU would lead to revenue loss of Rs 25,000 crore over a 15-year period to the government. The government's earnings comes by way of 10 per cent royalty earned on gas produced from domestic fields.

(This article was published in the Business Line print edition dated May 5, 2006)
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