May 10, 2012 12:49:37 am
The Directorate General of Hydrocarbons (DGH) has questioned Reliance Industries Limiteds selection of just 31 valid bidders out of the 73 bids it received for buying its coal bed methane (CBM). DGH says RIL has not disclosed the calculated price of gas for all valid bids nor has it furnished reasons for doing so.
In a April 12 letter to the petroleum ministry,the DGH said RIL has received 73 bids and from these,the company found that 59 were valid and 14 invalid. However,RIL selected 31 bidders as serious players in sectors like power,fertiliser,sponge iron,refinery,city gas distribution and petrochemicals.
DGH added that RIL had initiated bids in the open market and therefore,the price discovery process followed by the contractor is in compliance with Article 18.6 of the CBM contract and subsequent guidelines issued by the petroleum ministry. According to the contract,the government must approve RILs pricing formula in 60 days,but in view of the the need for further clarity of RILs prices,it got delayed.
RIL has told the government that fertiliser companies offered non-serious bids inspite of buying liquefied natural gas from spot markets at 3-5 times the price they had quoted for CBM.
Rashtriya Chemicals and Fertilizers (RCF) has submitted a ridiculous bid which amounts to the contractor paying RCF $2.75 per mmBtu for supplying gas to it. The price quoted by Tata Fertiliser Ltd comes to a measly $1.55 per mmBtu at the same level, a petroleum ministry official said quoting RIL.
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