Press Releases

Supply of MRP (Market-Related Price) gas to IPCL
GAIL (India) Limited
(New Delhi, February 22, 2006.)

New Delhi, February 22, 2006.New Delhi, February 22, 2006. With reference to a PTI report on recovery of marketing margin by GAIL from the Reliance Group Company, IPCL, the facts are as follows:-

The Government gas pricing order which came into effect from the 1st of July, 2005, categorizes the consumers of natural gas from the offshore South Bassein fields into two groups, one group falling under the Administered Price Mechanism (APM) from whom the price of Rs.3200 per thousand cubic meter is charged and the second group from whom a Market-Related Price (MRP) of $3.86 per MMBTU at the land fall point is charged. IPCL Gandhar, IPCL Baroda and IPCL Nagothane fall in the second category.

The Gas Pricing Order is confined to the price at the land fall point. All downstream costs including transmission tariff, taxes and marketing costs are additional. Currently, IPCL Gandhar, IPCL Baroda and IPCL Nagothane are billed accordingly.

IPCL Gandhar and IPCL Barorda are also buying natural gas from the Panna-Mukta-Tapti consortium, which has ONGC, Reliance Industries and British Gas as members, at a price of $4.08 per mmbtu inclusive of marketing cost which is 10 cents more than GAIL’s price of $3.98 per mmbtu inclusive of marketing cost. To the best of our knowledge, IPCL have not protested to the Ministry against the price charged by the PMT consortium.

Notice of termination of supply has been served on IPCL since they have not signed a supply agreement with GAIL and outstanding dues are mounting.