GAIL Asked to Remit Incremental KG-D6 Gas Price Every Month

Government has asked GAIL to remit to the exchequer on a monthly basis the incremental gas price from RIL's KG-D6 field towards recovery of profit share it claims is due from the private firm.

The government directed GAIL on March 2 to deposit the amount which is presently credited to the gas pool account...to the government's exchequer towards the additional profit petroleum of $195.34 million due and payable by the contractor up to 2013-14," Oil Minister Dharmendra Pradhan said in a written reply to a question in the Rajya Sabha.

The government had in November last year hiked domestic natural gas prices by 33 per cent to $5.61 per million British thermal unit. In case of RIL's main gas field in KG-D6 block, it, however, ordered buyers to pay the firm old rate of $4.2 and deposit the balance $1.41 in the gas pool account maintained by GAIL.

The revenue collected in the gas pool account was to recover $195.34 million in profit petroleum due from RIL after $2.376 billion in cost was disallowed for KG-D6 output lagging projections.

"The government directed GAIL on March 2 to deposit the amount which is presently credited to the gas pool account... to the Government's exchequer towards the additional profit petroleum of USD 195.34 million due and payable by the contractor up to 2013-14," Oil Minister Dharmendra Pradhan said in a written reply to a question in the Rajya Sabha.

GAIL has also been directed to keep on depositing the amounts to the government's revenue account on monthly basis till the amount of additional profit petroleum due to the government is fully recovered, he said.

The incremental $1.41 would become due to RIL if it can legally prove that Dhirubhai-1 and 3 gas output dropping to a tenth of projected 80 million cubic meters per day was due to geological reasons and not because of hoarding.

Sources said RIL and its partners are paying the government statutory levy of royalty at the rate of 5 per cent on the $4.2 gas price they got and GAIL pays the same from the gas pool account on the remainder payments of $1.41.

Mr Pradhan said the ministry had disallowed development cost of $2.376 billion because cumulative production lagged production estimates in the approved field development plan.

"As a result of disallowance of a portion of contract cost, contractor is liable to pay additional profit petroleum of USD 195.341 million to the government for period up to 2013-14," he said.

RIL and its partners "failed to remit the additional profit petroleum to the government within 30 days from the receipt of the last notice dated July 10, 2014, he added.