Media reports indicate that the Comptroller and Auditor General (CAG) would study the impact of the recent hike in the price of natural gas on the financial position of Reliance Industries (RIL).
For natural gas sourced from RIL’s KG D6 basin, the hike in the price would be effective from April 2014, when the contractual price agreement between the firm and the government expires.
Recently, the union cabinet decided to double the price of domestic natural gas from $4.2 per million metric British thermal unit (mmBtu) to $8.4 per mmBtu from the next financial year.
CAG may ascertain how much profit RIL would stand to make in the Krishna Godavari D-6 basin. The CAG is currently auditing RIL’s KG D-6 basin up to 2011-12 but sources said its scope of audit could include decisions taken by the government that would benefit the private player and a presumptive loss to the exchequer.
According to some reports, RIL has recovered most of the cost it spent in developing KG D6 and the increase in price would only go as profit.
So far, RIL booked about 90 percent of receipts from K-G D-6 as expenditure and in the remaining 10 percent, only 1 percent was paid to the government and rest 9 percent went to the operator as profit.
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