$600 million at stake as govt resurrects old dispute with oil biggies

The government is considering referring to a panel of experts an old dispute with Reliance Industries, ONGC and half a dozen other oil firms over how much penalty explorers must pay for unfinished minimum work programme in blocks awarded in previous exploration rounds.

The government has claimed about $600 million in penalty from companies, including $380 million from Reliance and a little more than $100 million from ONGC, people aware of the matter said.

Companies have contested these claims that would easily double if interest is added.

Hence the move to refer the matter to the experts’ panel — comprising former petroleum secretary G C Chaturvedi, former Oil India chairman Bikash C Bora and Hindalco Industries managing director Satish Pai — set up in December.

However, the panel can consider the matter only if companies also agree to such mediation.

Oil ministry officials have discussed the idea with the panel and now they need to persuade companies to join the mediation process, people aware of the matter said.

The experts’ panel was set up to resolve any dispute or difference arising out of a contract relating to exploration blocks if both parties to the contract agree to mediation while committing that they wouldn’t invoke arbitration proceedings thereafter.

The government had recently referred the dispute with ONGC and other state-run companies to a committee of secretaries, where the matter hasn’t made much progress.

Now, if private companies agree to mediation by the experts’ panel, then the state-run companies’ matter would also be referred to that panel, people cited earlier said.

ET Energy World
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