GAIL criticised over $0.12 extra charge for PMT gas
GAIL is coming under fire over plans to charge $0.12/mmbtu marketing margin in its talks with retailers for PMT gas.
“What marketing is GAIL doing to justify charging this amount†asks an angry source. “Until now we have been buying from the PMT consortium on our own.
GAIL has just entered the picture, thanks to the oil ministry.†At the most, we are told, GAIL can describe itself as a â€کdistributor’ of PMT gas to companies that have been approved by the oil ministry, not a â€کmarketer’.
“If GAIL is allowed to charge $0.12,†we are told, “Reliance will also demand the same amount for its D6 gas when it is sold.†Until now, Reliance has been planning to charge customers $0.06/mmbtu in marketing margin - half the proposed GAIL figure.
Outrage at GAIL’s attempt to impose a $0.12 marketing margin follows the government’s controversial decision to force PMT consortium partners British Gas (30%), Reliance (30%) and ONGC (40%) to sell the entire 17.3m cm/d gas output from the fields to GAIL with effect from April 1 this year. Before then GAIL was receiving only 5m cm/d, with the rest sold directly to customers GSPC, Gujarat Gas and Reliance-owned IPCL – all of which received significantly more before the deal was signed in the early hours of April 1.
Only GSPC appears ready to pay whatever marketing margin GAIL asks – knowing full well that whatever it pays will always be cheaper than R-LNG. “We have agreed to pay the full marketing margin,†confirms GSPC, “partly by absorbing it and partly by passing it on to our customers.
†GSPC justifies its position saying PMT gas at $5.57/mmbtu is “a bargain†compared to spot LNG at $14/mmbtu. In such a situation, argues GSPC, $0.12 marketing margin is nothing.
GSPC believes GAIL will eventually settle for $0.06 marketing margin to reflect what it will pay Reliance for D6 gas. “Whatever amount is fixed by GAIL we are ready to pay it,†says GSPC.
“Beggars can’t be choosers.â€