Govt to pursue recovery of $3.85 bn from Reliance Industries, partners

New Delhi: The government on Monday said it will pursue recovery of $3.85 billion from Reliance Industries and its partners in the Panna/Mukta and Tapti oil and gas fields case and is mulling an appeal against an English court order over cost recovery dispute in the same.

Reacting to an English High Court last week dismissing India's appeal against a $111 million international arbitration award in favour of Reliance Industries Ltd and Shell-owned BG Exploration and Production India Ltd (BGEPIL), the govt said it has the right to seek leave of the English commercial court to challenge this judgment.

RIL and BGEPIL on December 16, 2010, dragged the government to arbitration over cost recovery provisions, profit due to the state and amount of statutory dues including royalty payable. They wanted to raise the limit of the cost that could be recovered from the sale of oil and gas before profits are shared with the government. The govt also raised counter claims over expenditure incurred, inflated sales, excess cost recovery, and short accounting.

A three-member arbitration panel, headed by Singapore-based lawyer Christopher Lau, by majority issued a final partial award on October 12, 2016. It upheld the govt view that the profit from the fields should be calculated after deducting the prevailing tax of 33 per cent

and not the 50 per cent rate that existed earlier.

It also upheld that the cost recovery in the contract is fixed at $545 million in Tapti gas field and $577.5 million in Panna-Mukta oil and gas field. The two firms wanted that cost provision be raised by $365 million in Tapti and $62.5 million in Panna-Mukta.

Royalty, it said, had to be calculated after the inclusion of marketing margin charged over and above the wellhead price of natural gas.