RIL hits a new high

RIL is amongst the top gainers on the BSE currently, up at Rs.1043, a rise of over 4.5% and this is after hitting a new 52-week high of Rs.1048.

The stock is up on the back of news of the company, along with its partners, BP and NIKO issuing an artbitration notice to the Govt over implementation of new gas price from 1^st April, 2014. This is the gas produced from the Krishna-Godavari basin.

The new gas pricing guideline was notified on 10^th Jan’14 and the Govt had approved Rangarajan’s formula of doubling the gas price to %8.4/unit, effective April 1^st, 2014. Even then RIL had argued that the new price was below the price of imported LNG. But this new price made no headway as the Election Commission stopped the Govt from notifying the new price as long as the Election Code of Conduct was in force.

Well into May, when new prices should have come into effect in April, RIL has said that this continuing delay on part of the Government of India in notifying the price in accordance with the approved formula for the gas to be sold has left the parties with no other option but to pursue this course of action. The company has stated that without this clarity, the parties are unable to sanction planned investments of close to $4 billion this year.

The market is hopeful that with today being the last day of the poll and the code of conduct coming to an end, RIL might finally get this new gas price, be it through legal action or otherwise.