The validity of marketing margin being levied by the Mukesh Ambani-led firm Reliance Industries Ltd (RIL) on the sale of gas from its Krishna Godavari-D6 fields, has been questioned by the Power Ministry and the state-run generation utility NTPC on Friday.

Marketing margin essentially is the cost to "market the product" and to "develop a market" for it, including services and infrastructure.

The issue of marketing margin has come to fore with NTPC and RIL fighting a lawsuit in the Bombay High Court, concerning a 2003 tender for supply of 12 million cubic metres per day of gas. The contract entailed a cost of $4.20 per unit plus the $0.135 per unit marketing margin.

Writing to the Power Ministry, NTPC had sought confirmation on the payment of the marketing margin.

However, opposing the marketing margin being charged by RIL on gas from its Andhra offshore field, the Power Secretary, HS Brahma, said that margins are usually imposed when distribution chains are involved; however, he added this was not the case in a gas sales agreement.

Responding to media queries about the validity of the levy by RIL, Brahma told reporters: "Normally, marketing margins are involved where there is a wholesaler, a distributor, a retailer… But in this case of gas sales, there is no wholesaler or retailer. It is a one-man show, one company is doing that."