NTPC seeks clarification on marketing margins

Having signed a gas sale and purchase agreement (GSPA) with Mukesh Ambani-owned Reliance Industries Limited (RIL) for one of its plants, NTPC on Friday sought a clarification either from the Petroleum Ministry or the Empowered Group of Ministers (EGoM) on payment of marketing margin on the gas it will buy from RIL.

NTPC, after months of dithering, this week signed pacts to buy 0.61 million standard cubic metres per day of gas from RIL’s KG-D6 fields at $4.20 per million British thermal unit (mBtu) price plus $0.135 per mmBtu marketing margin under protest. At the same time, it had asked the Power Ministry to take up the matter with the Petroleum Ministry.

On his part, Power Secretary H. S. Brahma questioned the applicability of the levy even. “Normally, marketing margins are paid where there is a wholesaler, a distributor and a retailer. But in this case of gas company (RIL), there is no wholesaler or retailer. It is a one-man show, one company is doing that,” Mr. Brahma added.

In a letter to the Power Ministry, NTPC has stated that NTPC’s board, while approving the signing of the GSPA with RIL, had decided to take up the matter of marketing margin separately with the appropriate government authority. The company said it had sought legal opinion on Petroleum Ministry’s advice that marketing margin was purely a commercial issue between the seller and the buyer. The legal opinion stated that “this issue is a commercial issue and NTPC would need to look at it accordingly. NTPC should take up the issue of marketing margin separately through the Ministry of Power with the appropriate authority in the government”.

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Printable version | Nov 29, 2020 1:19:43 AM |

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