KG basin dispute:Fresh plea for appointing arbitrator

KG basinA fresh plea was on Friday made in the Supreme Court for appointment of a third arbitrator to resolve the dispute between the Centre and Mukesh Ambani-led Reliance Industries Ltd (RIL) on KG basin in the wake of an Australian judge recusing himself.

A plea in this regard was mentioned before a bench headed by Chief Justice R.M. Lodha which said that the registry would list the matter in due course. The issue was mentioned by RIL advocate who said Michael Hudson McHugh, former judge of the high court of Australia, nominated by the apex court on 29 April, has withdrawn himself from arbitrating the dispute.

Hudson McHugh, ex-judge of Australia’s highest court was named as the chairman of the Arbitral Tribunal as the apex court had on 2 April withdrawn the appointment of James Spigelman, ex-chief justice and LG of New South Wales, Australia. Spigelman’s appointment was withdrawn after the Centre drew the attention of justice S.S. Nijjar (since retired) that his name was mentioned in the list of names proposed by the Reliance group for appointment as an independent arbitrator.

Justice Nijjar had on 31 March passed an order on the issue of appointment of independent arbitrator as the chairman of the Arbitral Tribunal whose two other members are former chief justices of India—S.P. Bharucha and V.N. Khare.

While RIL has nominated former justice Bharucha as its arbitrator, the Centre chose justice Khare as its nominee. The Supreme Court decided to appoint an international arbitrator as the chairman for adjudication of dispute between RIL and the government over recovery of cost for developing the country’s key natural gas field in KG basin.

(Source: PTI)

Kejriwal now targets Mukesh Ambani, Moily

kejriwalDelhi chief minister Arvind Kejriwal on Tuesday directed the anti-corruption branch (ACB) of his government to register an FIR against Reliance Industries Ltd (RIL) chairman Mukesh Ambani, petroleum minister Veerappa Moily, former petroleum minister Murli Deora and former director general of hydrocarbons VK Sibal for increasing the price of natural gas produced in India. The increase will cost the country Rs. 54,000 crore per year.

Kejriwal’s move follows a complaint by former cabinet secretary TSR Subramaniam, former navy chief Admiral RH Tahiliani, former revenue secretary EAS Sarma and Supreme Court lawyer Kamini Jaiswal, which alleged that ministers and bureaucrats, in collusion with RIL, increased gas prices to give the company undue benefits of Rs. 1.2 lakh crore.

Read: Government acted on complaints by four activists

The Cabinet Committee on Economic Affairs had, in June last year, approved a gas pricing formula fixed by a committee headed by former RBI governor C Rangarajan. According to this formula, gas prices in India will rise from $4.2 per unit to $8.4 per unit from April 1 this year.

PSUs like ONGC and OIL produce 70% of India’s gas and so, will get the lion’s share of the benefits accruing from the higher gas prices. RIL’s KG-D6 block accounts for 15% of India’s gas production.

“The Delhi government’s direction to order the registration of an FIR in relation to the union cabinet’s decision to revise the price of gas is indeed shocking,” RIL said in a statement. “We deny these irresponsible allegations and propose to resort to available legal remedies to protect our reputation and preserve the pioneering efforts and investment made by Reliance so far.”

Read: Kejriwal timeline: Civil servant to Street-fighter to CM

According to Moily, the higher price is necessary to attract more domestic and foreign investment in India’s oil and gas sector. “If we can import gas at $12-16 per unit, what’s wrong with paying half that price to domestic producers?” he had told HT in a recent interview.

Read: Moily slams Arvind Kejriwal govt over FIR order; Gurudas hails move

But experts pointed that gas prices, unlike oil prices, vary widely throughout the world. In the US, it is available at $4.5 to $5 per unit. “RIL’s partner Niko has a 25-year contract with the Bangladesh government to supply gas at $2.34 per unit,” Kejriwal said and questioned the role of the Congress-led UPA government in the decision as well as the BJP’s silence.

The logic: if companies can produce gas at lower prices elsewhere, it can also be done in India.

“In case this price hike is allowed to take place, it will make the life of the common man miserable since it will have a cascading effect on prices of transportation, domestic gas and even electricity,” Kejriwal said.

Reacting to the charge, Moily said: “I think I should sympathise with his ignorance. He should know how the government functions… how these things are done. There should be a system for fixing prices. Nothing is done without expert advice. If he (Kejriwal) can give some money, we will be very happy to reduce the prices.”

Read: Government defends new gas price, but questions abound

The Supreme Court is hearing two public interest litigations, by CPI MP Gurudas Dasgupta and NGO Common Cause, respectively, challenging the higher gas price and seeking cancellation of RIL’s contract to produce gas in the KG-D6 basin, off the Andhra Pradesh coast.

“I am going to write to the Prime Minister and the petroleum minister to put on hold the price hike till the probe by our ACB is over,” the Delhi chief minister said.

Sibal and Deora couldn’t be reached for their reactions.

(Source: IANS)

Court notice to centre; Reliance on gas price

The Supreme Court on Monday issued notice to the Centre, Petroleum Minister M. Veerappa Moily and Reliance Industries Limited (RIL) on a public interest litigation petition challenging the government’s decision to double the price to $8.4 per million British thermal unit (mmBtu) for gas produced from the KG basin.

A Bench of Chief Justice P. Sathasivam and Justices Ranjana Desai and Ranjan Gogoi also issued notice to the Petroleum Ministry, NIKO Resources Ltd and BP Exploration (Alpha) Limited on the plea filed by CPI leader Gurudas Dasgupta and the former Power Secretary, E.A.S. Sarma.

Senior counsel Colin Gonsalves, appearing for the petitioners, said the decision to raise gas price should be reviewed as the Minister had overruled the opinion of senior officers of his ministry and his predecessor. When Justice Sathasivam wanted to know “why the parties can’t go for arbitration,” counsel pointed out that the Minister had given a statement that he wanted to junk arbitration and that the government would not proceed with the process.

Counsel alleged that the Minister “bats for Reliance” and had overruled the decision of the Director-General of Hydro Carbons to impose a fine on it.

Senior counsel Harish Salve, appearing for Reliance Industries, however, said, “We want arbitration to go on. We will file an application for appointment of the third arbitrator.”

Justice Sathasivam told counsel “It [PIL petition] requires examination. When a Member of Parliament comes and makes an assertion it cannot be decided at the admission stage. We are not expressing any opinion at this stage.”

“Illegal, mala fide’

The petitioners said the government had acted illegally, unreasonably, irrationally and with mala fide in granting excessive benefits to the respondents, thereby virtually bankrupting the exchequer and adversely affecting the Indian economy as a whole. The contractors allegedly incurred investment costs for the full capacity of 80 MMSCMD and recovered all these costs and perhaps more from the government through the sale of gas priced at $4.2 per mmbtu. Simultaneously, the contractors deliberately reduced production, thus holding the country to ransom at a time when gas demand far outstripped supply. By June 2013, only 9 out of 18 wells were in production and gas sales were only 18% of the target of 80 MMSCMD. The reduction was done in anticipation of a price rise and this was confirmed by government’s announcement that from April 2014 the price would be increased to $8.4 mmbtu.

“RIL, which had gone in for arbitration, had already recovered this amount from the sale of natural gas. They appointed Justice S.P. Bharucha as their arbitrator. The government appointed Justice V.N. Khare as its arbitrator. Both judges met and were in the process of appointing the third arbitrator in October 2012 but could not do so.” RIL would be sitting pretty if the arbitration was not proceeded with. “It is the government which stands to lose up to $ 2.4 billion by the end of the current year, by not proceeding with the arbitration. The Petroleum Ministry is deliberately not proceeding with arbitration to allow RIL to get away without paying penalties for the shortfall in production.”

The petitioners sought a direction to RIL and NIKO to forthwith relinquish those areas of the KG basin as recommended by CAG; to appoint a third arbitrator (umpire) and to proceed with arbitration expeditiously and complete it within six months; to fix the price of domestically produced gas in rupees, and not in dollars or any other currency, and to stay the doubling of the gas price.

(Source: IANS)

Court notices to centre, Reliance on gas price

Supreme Court on Monday issued notice to the centre and Reliance Industries on a public interest litigation seeking review of the recent government decision to hike from 2014 the gas prices from $4.2 to $8.4 million British thermal unit (mmBtu).

The apex court bench headed by Chief Justice P. Sathasivam issued notice on the PIL by CPI leader and senior parliamentarian Gurudas Dasgupta contending that the government decided to hike the gas prices without taking into account its disastrous consequences on the country’s economy, particularly power and the fertilizer sector.

Mr. Dasgupta has contended that the price hike was decided even when five cabinet ranking ministers had opposed the move.

The PIL sought the enforcement of relinquishment laws by which government should reclaim 80 percent of the KG Basin gas field that has not been utilised by Reliance.

Directing the listing of the matter Sep 6, senior counsel Harish Salve accepted notice on behalf of Reliance. Notices are returnable in four weeks.

(Source: IANS)