The government’s attempt to enforce non-payment of $4.5 billion in an international arbitral award of the Panna-Mukta and Tapti (PMT) production-sharing contracts case is premature, said Reliance Industries Ltd (RIL) on Sunday.
On Friday, the Delhi High Court had ordered RIL and British Gas (now Shell) to disclose their assets after the Centre sought to restrain them from disposing of the same. RIL plans to sell a 20% stake in its refining and petrochemicals business to Saudi Aramco.
In an emailed response, RIL spokesperson said in October 2016, the Arbitration Tribunal issued a partial award in the arbitration between the government and Shell India-owned BG Exploration and Production India Ltd (BGEPIL) & RIL regarding the Panna-Mukta and Tapti Production Sharing Contracts (PSC).
However, it did not award any monetary sums. “Quantification of amounts, if any, by the tribunal is to be done when all issues have been decided,” a RIL spokesperson said.
RIL and BGEPIL, however, challenged certain parts of the 2016 award before a UK court, which ruled in its favour and directed the arbitration tribunal to reconsider the 2016 award.
The tribunal, on reconsideration, passed another partial award in December 2018 (2018 award) which was in favour of BGEPIL and RIL. “2016 award, in part superseded by 2018 award, cannot be said to have attained finality and attempts to enforce 2016 award are premature,” RIL said.
The government, since 2010, has been fighting an arbitration with RIL and its partner, alleging that the companies appropriated huge sums of money in violation of the production sharing contract in the PMT oil and gas fields. According to the government, RIL and its partner are required to pay $4.5 billion with interest.
RIL chairman Mukesh Ambani had on 12 August announced the company’s plans to sell 20% stake in its refining and petrochemicals business for $15 billion to Saudi Aramco, the most profitable company in the world. Saudi Aramco controls the world’s second-largest proven crude reserves at more than 270 billion barrels, and the partnership will go a long way in insulating RIL from any future oil shocks and volatility in crude prices. The deal, which values the oil-to-chemicals (O2C) business at $75 billion, is part of a plan to make RIL a zero-debt company by 2021, Ambani had said on 12 August.
Ambani is aiming to slash RIL’s ballooning debt after spending as much as $50 billion to propel its telecom business to the top position in India within three years of starting operations, surpassing Bharti Airtel Ltd and Vodafone Idea Ltd.
RIL asserted that while the above appeal was pending in the English court, the government unilaterally calculated certain amounts, based upon its interpretation of the 2016 award, which it alleges are payable by state-owned Oil & Natural Gas Corporation (ONGC), BGEPIL and RIL.
“Pursuant to 2018 award, the government’s claim comes down very significantly– a fact which the government has not taken cognisance of and approached the Delhi High Court prematurely for enforcement of its claim computed based on its interpretation of the 2016 award. RIL maintains that except as quantified by the tribunal no amounts can be said to be payable at this stage,” RIL spokesperson said.
The government has challenged the 2018 award and the English court is yet to pronounce its judgment.
“Final amounts payable, if any, by the parties–(ONGC 40%) (BGEPIL 30%) and (RIL 30%)– can only be determined by the arbitration tribunal in the quantification phase of the arbitration that will be scheduled after it has decided on all the issues before it, RIL said.
Source: Livemint
