Talks between Reliance Industries (RIL) and fertiliser companies over gas supply terms are still not over, indicating some hiccups remain.
“RIL has tweaked a couple of clauses, but the rest of the terms (of the gas supply and purchase agreement) are the same. Negotiations are still on to work out a median for the remaining clauses,” said a senior official of the Fertiliser Association of India, requesting anonymity since he is not the official spokesperson.
The secretary general of FAI, Satish Chander, said he expects the issues to be resolved in a week. “We are trying to resolve it as soon as possible. By the end of this week we hope to sign the agreement ... We have already expressed a few other concerns, which they (RIL) have agreed to consider,” Chander told Reuters.
As per the revised gas sales and purchase agreement, RIL has raised the marketing margin to $0.15 per million British thermal unit (mmBtu) from $0.12 per mmBtu earlier, a company official said.
However, it has decided to bear additional risks of compensating users in case of non-supply.
RIL said it will compensate users for the charges they may have to pay to pipeline transporter, Reliance Gas Transportation India, in case of default in supplies on its part due to reasons other than force majeure.
When contacted, RIL refused to comment.
The dispute revolves around the 15 million cubic metres of gas that RIL is legally bound to sell to fertiliser companies out of its total production of around 40 million from its D-6 block in the initial years.
About seven weeks ago, the Bombay High Court had allowed RIL to enter into conditional supply contracts with gas consumers after the company said production will start by end of February.
The negotiations soon ended in a stalemate with the FAI shooting off a letter to the fertiliser secretary detailing eight points in the old contract that fertiliser companies did not agree with, a copy of which is with DNA Money.
Among other things, they had objected to enabling clauses that bound them to make payments to RIL in US dollars rather than in Indian rupees and “take or pay” clauses.
Sources said issues over payment in dollars and gas marketing fees have not been resolved.
“RIL has diluted the ‘payment in dollars’ clause and has given an option to make the payment in rupees. However, according to the revised agreement, RIL still has the right to ask for the payment in dollars,” he said.
He also complained that in the new draft, RIL has increased the gas marketing fees in the new contract by 25%.
“Earlier, the gas marketing fees was just 12 cents per mmBtu and we want RIL to roll back this increased fee.”
Being a subsidised product, 30% of the price of gas will be borne by the government.
An official from another public sector fertiliser company said it had given fresh suggestions and comments to RIL.
“The deal will take few days more,” he added.
