Categories: Business

Reliance estimates maximum liability of $ 400 million in KG D-6 cost recovery dispute

Image Source: GOOGLE

new Delhi. Reliance Industries estimates that in a nine-year-old dispute with the government, the maximum estimated liability on it would be $ 400 million or Rs 3,000 crore. The company's dispute with the government is related to lack of full capacity utilization in the KG-D6 sector due to failure to comply with the approved investment plan. Production in the Dhirubhai-1 and 3 areas of the KG-D6 block in the Bay of Bengal began to fall below the company's estimate since the second year ie 2010. In February this year, production from these areas ceased. This is well past the estimated 'age' of these regions. The government alleges that the company did not comply with the approved development plan. Because of this, the company has not allowed the company to recover the cost of three billion dollars. The company protested, dragging the government into mediation.

Reliance has stated in its rights issue document that the government has sent a notice to the company and its partners in KG-D6, stating that they did not comply with the approved development plan and did not utilize the capacity, which allowed them to recover costs. Can not be given Apart from this, the government has also demanded additional profits. At the same time, the company argues that there is no such provision in the KG-D6 contract, which gives the central government the right to not allow cost recovery on this basis. The company said that the Production Partnership Agreement (PSC) allows the contracting company to extract all its capital and operating costs from the sale of gas and oil discovered from a block. After extracting the cost, profit sharing has to be done with the government. By not allowing the total cost to be removed, the government is seeking a greater share of the profits. On November 23, 2011, the company served a notice of arbitration to the central government. The company and the government have placed their respective parties before the three-member Arbitration Tribunal. Now the final hearing of the case is expected from September to December 2021. The company has said that the matter is still pending. However, it could have a financial impact of $ 200 million to $ 400 million in this case.

This post was published on May 24, 2020 11:57 am

Content Team

Recent Posts

Former RBI Governor Raghuram Rajan expressed apprehension of increasing NPA, D Subbarao gave this suggestion to the government

Photo: GOOGLE NPAs may witness unprecedented increase in 6 months, says Raghuram Rajan new Delhi. Former Reserve Bank Governor Raghuram…

wipro q1 consolidated net profit flat at Rs 2390 crore

Photo: WIPRO Wipro q1 result new Delhi. Consolidated Net Profit of information technology company Wipro grew marginally to Rs 2,390.4…

YES Bank garners Rs 4500 Crore from anchor investor

Photo: PTI yes bank new Delhi. Private sector Yes Bank raised Rs 4,500 crore from anchor investors on Tuesday ahead…