The Petroleum and Natural Gas Ministry is exploring the possibility of asking Reliance Industries’ foreign partners in the KG-D6 block to deposit the difference between the exiting and the new gas price into an ‘escrow account’.
The new price will be effective April 1.
This means that the higher price of gas would be deposited into a third account, which would be released only after RIL’s arbitration with the ministry is over. The Mukesh Ambani-led company and the Petroleum Ministry are engaged in an arbitration after the Government restricted the costs to be recovered by the explorers.
The escrow account mechanism, if implemented, would be for Canada-based Niko Resources and the UK’s BP, while RIL would submit a bank guarantee for its share, said a senior ministry official. However, the Petroleum Ministry is also considering letting Niko and BP submit bank guarantee. Clarity would come after the Supreme Court’s decision on the matter, he added. According to RIL, the guarantee has to be paid by all three consortium partners jointly, depending on their stake (RIL 60 per cent, BP 30 per cent, Niko 10 per cent).
Only after the principles of bank guarantee calculations and the process of furnishing are finalised, the amount will be decided.