Anil Ambani group wants RIL’s marketing margin stopped

Reliance Industries Chairman Mukesh Ambani.

The Anil Ambani Group has asked the Empowered Group of Ministers (EGoM) to consider on Tuesday the issue of marketing margin on sale of KG gas, charged by Reliance Industries and said that this illegitimate levy should be stopped.

The seven member EGoM (a Cabinet sub—committee) is scheduled in the afternoon of October 27, to consider the commercial utilisation of RIL’s KG-D6 gas and other related matters. The issue of the company charging the USD 0.135 per mmBtu marketing margin is not listed on agenda.

Anil Ambani Group firm Reliance Infrastructure wrote to Sushil Kumar Shinde on October 23, requesting him to take up the issue of the levy, over and above the Government-approved gas price of USD 4.205 per million British thermal unit at the ensuing meeting of EGoM.

“RIL should be directed to immediately put a stop to this illegitimate levy of marketing margin from all customers of KG Basin gas and refund the marketing margin wrongfully collected so far,” Reliance Infra CEO Lalit Jalan said in his letter.

R-Infra had paid the levy RIL imposed to make up for marketing cost for over four months without protest but on September 15 wrote to the Mukesh Ambani-firm saying it will no longer pay the “unauthorised and illegal” levy.

R-Infra said the “unjustified” marketing margin levied by RIL did not “add a single rupee to the Government’s revenue.” .

“The unlawful marketing margin is not part of valuation price that is used to determine the Government’s take and the entire marketing margin goes to RIL’s revenues,” he wrote.

“Such unauthorised charges if paid by the power companies, would lead to higher cost of generation for gas based plants affecting the viability of power generation and hence should be immediately stopped.”

RIL had sent a notice to Anil Ambani group firm saying the gas supply would be suspended due to default in payment of an estimated Rs 12 lakh in marketing margin for 0.56 mmscmd gas supplied to its Samalot in the first half of September.

The company however, paid the levy “under protest” and sought withdrawal of the suspension notice.

“In stark defiance of the decision of EGoM taken on September 12, 2007, RIL is currently charging a marketing margin of 13.5 cents per mmBtu in addition to the base price of USD 4.2 per mmBtu,” R-Infra CEO and Director Lalit Jalan wrote to Shinde.

“RIL has included marketing margin as part of sale price in the Gas Sales and Purchase Agreements (GSPAs) signed with us and other power companies.”