India Allows Reliance to Charge Higher Gas Price

The Indian cabinet on Thursday allowed Reliance Industries (RIL) to nearly double the price of natural gas from April provided the firm gave a bank guarantee to cover its liability if gas-hoarding charges are proved, reports Press Trust of India.

“The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block since 2010-11,” Press Trust says citing sources.

Earlier this year India hiked domestic gas prices, which will come in effect from April 2014, but RIL was restricted from charging new prices until the company either made up for the shortfall in output during past three fiscals, or it is proved that the company was not responsible for production falling below targets.

The rate in April 2014, when the new pricing is to be implemented, will be about $8.4 per million British thermal units as against the current $4.2.

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