Mukesh Ambani's Reliance Industries Ltd is working on a pricing formula for coal bed methane from three blocks in Sohagpur (east and west) and Sonhat in Madhya Pradesh, prior to asking government approval.
The government is now insisting on its power to set the price for any gas produced by private companies.
A person familiar with the development, who said the RIL decision could set a benchmark for CBM gas pricing, said: "RIL is discussing the issue with some power and fertiliser companies.
After they arrive on a price, they will take it to the government." An RIL spokesperson would not comment on the matter.
The YK Modi-promoted GEECL, the first company to produce CBM, is already selling gas (it didn't, at the time, have to take government approval) from its Raniganj block at $7 a British thermal unit.
RIL had, after discovering gas in its flagship Krishna-Godavari basin find on the east coast, invited bids from power and fertiliser companies to determine a market benchmark. KG-D6 gas is sold at $4.2 per unit.
According to the government's Directorate General of Hydrocarbons, Reliance holds a total of 3.6 trillion cubic feet of gas