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RIL files revised gas agreement with RNRL in Bombay HC

The new Gas Sales Master Agreement will replace the four-year-old GSMA between RIL and RNRL for supply of a minimum of 28 million cubic metres per day of natural gas at $2.34 per million British thermal unit

Mukesh Ambani-led Reliance Industries (RIL) has filed in the Bombay High Court (HC) the revised gas supply agreement it had entered with Anil Ambani Group firm Reliance Natural Resources (RNRL) last week for supply of natural gas at government-set terms, reports PTI.

The new Gas Sales Master Agreement (GSMA), which will replace the four-year-old GSMA between RIL and RNRL for supply of a minimum 28 million cubic metres per day of natural gas at $2.34 per million British thermal unit (mmBtu), was filed in the court on Wednesday.

A RIL spokesperson confirmed filing the new GSMA in court, but refused to give details. "We have filed the new GSMA, but I cannot disclose the contents," he said.

RIL and RNRL had on 25th June stated that they have signed a revised contract, as had been directed by the Supreme Court.

The apex court had in May rejected RNRL's plea for supply of gas at rates arrived in a private family agreement, saying the government alone had the right to approve the price of fuel and fix its user.

It said RIL can sell gas to RNRL at government-set prices and asked the two to enter into a fresh agreement.

The government has fixed $4.2 per mmBtu as the price of natural gas from RIL's eastern offshore KG-D6 fields for five years ending 31 March 2014.

The new GSMA was compliant with the government's gas pricing and utilisation policy, RIL had said in a statement on 25 June.

Within hours of signing the GSMA on 25th June, the Anil Ambani Group submitted it to the oil ministry for action.

RNRL, in a statement that day, said that it will seek "expeditious allocation" of gas from the government.

While RIL and RNRL have refused to share details of the new GSMA, sources in know of the development say the new contract does not mention the volume, tenure or price of gas, but only lists the requirement of gas at ADAG's proposed units, including the 7,800 MW Dadri plant and the Shahapur plant in Maharashtra.

Supplies may have also been sought for expansion of the 220-MW Samalkot plant in Andhra Pradesh, the 48-MW Goa project and the 165-MW Kochi plant.

Once gas allocation is approved by an Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee, RIL will enter into Gas Sales and Purchase Agreements (GSPA) with specific plants of ADAG at the price and tenure determined by the government.

ADAG plants may be at least 27-30 months away from taking first gas.


Food inflation falls to 12.92% on high base effect

The fall in food inflation would provide a breather to the government, which is struggling hard to control prices of essential items

Food inflation declined by a whopping 3.98 percentage points to 12.92% for the week ended 19th June, as the rate of price rise in cereals and vegetables showed a remarkable drop due to high base effect, reports PTI.

However, a number of essential items like pulses, fruits and milk remained quite expensive for the week in review.

The fall in food inflation would provide some breather to the government, which is struggling hard to control prices of essential items that may again rise due to the cascading effect of the diesel price hike last week, say analysts.

The fall in food inflation was largely because of high base effect, which means that inflation was so high at this point of time last year that the rate of price rise now looks comparatively lower.

"The significant fall in food inflation is due to the (high) base effect," Planning Commission principal advisor Pronab Sen, who retired as the chief statistician yesterday, said. Otherwise, most food items remained expensive, except for potatoes, onions, wheat and rice.

Because of the high base effect, cereal inflation came down to 5.36% against 13.42% a year ago, vegetables fell 1.17% against 25.19%. Within vegetables, potatoes turned cheaper by 39.61%, while onion prices fell by 7.36%.

Among cereals, rice inflation was 6.44% against 17.22% a year ago, and wheat stood at 4.49% against 6.40%.

However, many commodities such as milk, fruits and pulses turned expensive during the week under review. Pulses rose by 31.57% year-on-year despite some moderation on a weekly basis.

The latest data do not capture hike in prices of fuels, announced on 25th June and will be partly covered by the figures to be released next week. As such, prices of fuel items remained stagnant on a weekly basis.

In fact, the cascading effect of the diesel price hike will also push up food inflation. And economists do not expect food inflation to come to single-digit before September.

"Fuel inflation will go up, hiking the freight cost which in turn will put upward pressure on prices. Food inflation will come down to a low single-digit level only in the second half of the fiscal," Crisil chief economist Dharmakriti Joshi told PTI.

The government had last Friday hiked petrol prices by Rs3.5 a litre while deregulating it. The price of diesel was also raised by Rs2 a litre, while liquefied petroleum gas (LPG) went up by Rs35 a cylinder and kerosene by Rs3 a litre.

 Headline inflation, however, will remain in double-digits because of its spread to manufactured items and the recent hikes in fuel prices. Overall inflation stood at 10.16% in May.

"Overall inflation is likely to hover in double-digits for some more time on account of the fuel price hike," Yes Bank chief economist Shubhada Rao told PTI. She expects the Reserve Bank of India's (RBI) forthcoming monetary policy to focus on containing inflationary pressures.

"Policy focus will remain on containing inflation. The Reserve Bank has to lean over demand pull inflation and it will have to constantly monitor demand," Ms Rao added.

The apex bank is widely expected to raise short-term borrowing and lending (reverse repo and repo) rates at its first quarter monetary policy on 27th July.

Even the expected fall in food inflation from September also depends on the monsoon. "If the monsoon comes out to be good, there will be downward pressure on prices," Mr Sen said.

Significantly, monsoon has been 16% below normal in June.


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