RIL need not include marketing margin in royalty: Deora
Petroleum minister Murli Deora has announced in Parliament that Reliance Industries Ltd (RIL) need not include marketing margin with gas sale price for calculating royalty and the government’s profit share.. The statement overturns a suggestion by the Director General of Hydrocarbons (DGH) that suggested that the marketing margin should be included in the computation of royalty. RIL charges US $0.135 per million British thermal unit (mmBtu) towards marketing cost to the sale price of US $4.20 / mmBtu.
“The production sharing contract (PSC) does not envisage sharing of revenue earned by the contractor (RIL) on the marketing margin between the government and the contractor,” Deora told Rajya Sabha.
Under the PSC, the government has approved a price formula for the sale of gas from KG D6 field at the delivery point (the place where RIL transfers custody for sale to customer). The US $4.20 /mmBtu is the price fixed for five years. “The marketing margin is beyond the delivery point and arises as a result of gas sale and purchase agreement signed between the seller and the buyer,” Deora said in a written reply to a question by Amar Singh.
“PSC provides for sharing of revenue between the government and the contractor (RIL) of the sale of gas at the said price at the delivery point,” he said, adding that the marketing margin was settled between the buyer and the seller and the government has neither decided nor approved the same.
