New Delhi : Reliance Industries and its partners BP plc of UK and Canada’s Niko Resources have slapped an arbitration notice on the government seeking implementation of a delayed gas-price rise.
The trio had on May 9 issued a “pre-arbitration notice” saying failure to implement the increase from due date of April 1 is preventing them from sanctioning investments of almost USD 4 billion this year.
This arbitration notice wasn’t complete as the partners did not name their arbitrator as required for dispute resolution under the Production Sharing Contract (PSC), sources privy to the development told PTI.
RIL-BP-Niko on June 17 served a formal arbitration notice naming London-based Sir David Steel as its arbitrator.
The three firms want the government to honour its commitment and implement revised natural gas prices upon expiry of the $4.2 per million British thermal unit rate for their eastern offshore KG-D6 gas fields on March 31, 2014.
The previous UPA government had on January 10 notified a new domestic gas pricing formula that would have doubled the gas rates from April 1 but before it would announce the new price general elections were declared.
The new government last month decided to defer a decision by a further three months pending wider consultations on the formula.
While the government had not entertained the May 9 notice, it now has 30 days ie up to July 17, to reply to the Notice of Arbitration (NoA), sources said.
The government had disallowed as much as USD 1.8 billion of its investment as KG-D6 output lagged targets. Production from main fields in the block was almost one-tenth of 80 million standard cubic meters per day target.