Govt slaps Rs 1,700 crore penalty on RIL, BP over KG-D6 gas issue


New Delhi, Aug 15 (PTI): The government has imposed a new penalty of USD 264 million (about Rs 1,700 crore) on Reliance Industries Ltd and its partners for producing less than the targeted natural gas from eastern offshore KG-D6 fields in 2015-16.

The total penalty now, which is in the form of disallowing recovery of cost incurred for missing the target during six years beginning April 1, 2010, stands at USD 3.02 billion, an oil ministry official said.

The Production Sharing Contract (PSC) allows RIL and its partners BP Plc of the UK and Canada's Niko Resources to deduct all capital and operating expenses from the sale of gas before sharing profit with the government. Disallowing costs will result in government's profit share rising.

The government has claimed an additional USD 175 million as its profit share after the cost disallowance, the official said. Gas production from Dhirubhai-1 and 3 gas field in the eastern offshore KG-D6 block was supposed to be 80 million standard cubic meters per day but actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14.

The output has continued to drop in the subsequent years and is now below 4 mmscmd. Emails sent to RIL and BP remained unanswered. The two companies have challenged the cost disallowance of the past years and have initiated an international arbitration seeking dropping of the same on grounds that the PSC does not provide for any such punishment.

The government had for 2010-11 disallowed USD 457 million of cost, USD 548 million for 2011-12, USD 792 million for 2012-13, USD 579 million for 2013-14 and USD 380 million for 2014-15. Now an additional USD 264 million has been disallowed for output lagging behind target in 2015-16.

The output was behind target in 2016-17 as well and the cost disallowance will be calculated only next year, the official said. RIL had previously stated that "every year, based on its own interpretations of the PSC and assumptions (with which the contractor group does not agree), the Ministry of Petroleum and Natural Gas revises the total cost it proposes to disallow and consequently aggregates the figure with figures of the previous years.

"It also demands additional profit petroleum (in total including previous year claims as well) as Government of India share". Of the additional profit petroleum claimed, the government has already collected gross USD 81.7 million in the
gas pool account by taking away any gas price higher than USD 4.2 per million British thermal unit during November 2014 to March 2016 period.

From April 2016 to date, the gas price has been less than USD 4.2 and no deposits were made to the gas pool account. Contractor group refers to RIL and its partners BP and Niko. RIL holds 60 per cent interest in block KG-DWN-98/3 or KG-D6 in Bay of Bengal. BP has 30 per cent and Niko the remaining 10 per cent.

  

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Comment on this article

  • Beowulf, Mangalore

    Wed, Aug 16 2017

    .....and some morons say that Modi is favouring Ambani.

    DisAgree [7] Agree [2] Reply Report Abuse

  • Peter, KSA

    Wed, Aug 16 2017

    Ise kehethe hai public ko maamu banana. First allow 25 thousand crores as Flavian told, then slap 1,700 crore peanut penalty. Bhakts says wah wah wah. No news on bank loan waiver for Adani Group of 72,000 crore and Green fine of 200 thousand crore. If common citizen has to pay even one lac rupees loan, bankers will pester in such a way, either he has to pay or commit suicide.

    DisAgree [1] Agree [4] Reply Report Abuse

  • Flavian dsouza, chik/bengaluru

    Wed, Aug 16 2017

    This is peanuts RIL will happily pay ..they have benefited by atleast 25,000 crores from KG-BASIN , they should have been booked for criminla offence since they have evaded the cess ..

    DisAgree [5] Agree [8] Reply Report Abuse

  • shailu, kolkatta

    Wed, Aug 16 2017

    Modiji is of course a smart politican after all he is from RSS school, he does not have a dynasty to support like Dongis he will get after who ever violates laws whether Hindu Muslim Christian .

    DisAgree [6] Agree [5] Reply Report Abuse

  • Flavian dsouza, chik/bengaluru

    Wed, Aug 16 2017

    KG - Basin has been looted by RIL fines should have been in the range of atleast 25,000 crores thats the amount of oil they have removed but not paid cess . He now has to sponsor next election also so understand the lowering of the fines ....how can you make 50,000 crores in 10 years which is the waelth what ambani has as of today just in cash ..

    DisAgree [4] Agree [4] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Wed, Aug 16 2017

    Will his friend allow him to pay ...

    DisAgree [8] Agree [10] Reply Report Abuse

  • Declan, Mumbai

    Wed, Aug 16 2017

    Know this that no matter how nice the current friendship between Modi and Mukesh may appear to be the bottom line is that Modi is a smart politician and Mukesh is a smart business man. As long as a 'win win' situation exists it will be you scratch my back and I will scratch yours. The moment the situation changes to 'I win but you lose' the mutual back scratching will come to a halt. At the end of the day everyone sees their own interest. Politicians and Business men hate losing. All this talk about nationalism and desh bhakti is for the 'intelligent' voters only.

    DisAgree [4] Agree [8] Reply Report Abuse

  • Anilkumar, Mangalore

    Wed, Aug 16 2017

    All drama may be an eyewash.
    Soon the Govt will withdraw the claim quietly and the matter will die its own death.
    If they really want to take action, treat the Ambani Group also like Vijay Mallya. So much default on bank borrowing goes unnoticed when it comes to Reliance.

    DisAgree [7] Agree [9] Reply Report Abuse

  • Declan, Mumbai

    Wed, Aug 16 2017

    No wonder these days CNN News 18 is going all out against the BJP whether in the Haryana stalking case or in the Gorakhpur tragedy case.
    Message basically is better support us in 2019 too or else penalties will keep increasing ???
    Mukesh bhai must be getting really embarassed when his overseas European and American business associates question him about things like beef ban, lynching etc. happening in India. It is high time he abandons people practicing religion cow politics.

    DisAgree [6] Agree [9] Reply Report Abuse

  • Canute, Dubai

    Wed, Aug 16 2017

    Independence day entertainment Drama.......

    DisAgree [6] Agree [11] Reply Report Abuse

  • Krishna, Canada

    Wed, Aug 16 2017

    ... and this is a slap on all those who complain about windfalls to ril under current govt.

    DisAgree [11] Agree [10] Reply Report Abuse

  • Amith, USA

    Wed, Aug 16 2017

    Can we assume that, penalty is original in nature???? Not at all!!! Ambani and Penalty??? Must be a Joke during Independence day celebration!!! JUUUMLA!!!!

    DisAgree [7] Agree [22] Reply Report Abuse

  • janush, Mangalore

    Wed, Aug 16 2017

    Its nothing but a cheap trick by mukesh ambani - within a month share price of RIL will go up atleast 200 rupees. Just watch for a month or two. Today the price is 1573 it will touch 1800 very soon.

    DisAgree [3] Agree [8] Reply Report Abuse

  • Langoolacharya., Belman/Wash DC.

    Tue, Aug 15 2017

    More Gas is produced and less is shown .... to avoid paying tax....Ambani must be missing his partner Karkala Vidhwaan ....any way as long as Modiji is there no prob...nothing to worry...

    If is afraid of any Indian politician its only Arvind Kejriwal...if Arvind becomes PM of India...Ambani will run to London to join Mallya and Junior Modi...

    ...JH...

    DisAgree [12] Agree [37] Reply Report Abuse

  • Anticorrupt, Mangalore, Kuwait

    Tue, Aug 15 2017

    Very well said,,,!

    DisAgree [4] Agree [12] Reply Report Abuse

  • Declan, Mumbai

    Wed, Aug 16 2017

    Modi is more interested in protecting himself and being a clever politician will not hesitate to abandon Mukesh bhai but will not allow Mukesh bhai to call the shots just because Mukesh bhai has given him his ATM card. Modi seems to have an authoritarian nature and is very unlikely to give Mukesh bhai any control over him. Modi well knows that if one 'aani' goes there are other 'aanis' he can get 'blessings' from. Good, because then Mukesh bhai is likely to join the opposition camp to help oust Modi from power.

    DisAgree [3] Agree [7] Reply Report Abuse

  • Peter, KSA

    Wed, Aug 16 2017

    Logic and true comment from Washington DC. You deserve medal. Crooked Industrialists and dirty politicians are aware that if Mr. Kajeriwal gain power, their rightful place is either jail or outside India. That is the reason he has bee silenced using every govt. machinery.

    DisAgree [1] Agree [3] Reply Report Abuse


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Title: Govt slaps Rs 1,700 crore penalty on RIL, BP over KG-D6 gas issue



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