The oil ministry reportedly wants to consult the law ministry on the arbitration notice and appointment of arbitrators and accordingly sought an extension of the deadline
New Delhi: The oil ministry has sought an extension of over one month in the deadline to respond to the arbitration notice issued by Reliance Industries (RIL) against proposed penal action for a fall in KG-D6 gas output. Reports PTI.
The oil ministry on Wednesday wrote to RIL seeking time till 31st January to respond to the arbitration notice, sources privy to the development said.
RIL had in the 24th November arbitration notice termed the ministry’s move to limit the amount of expenditure the company can recoup from its flagging KG-D6 fields in proportion to the gas production as illegal and outside the Production Sharing Contract (PSC).
As per the dispute resolution mechanism set out in the PSC, the government had one month’s time to respond to the notice and appoint arbitrators. RIL and the government have the right to appoint one arbitrator each. A third neutral adjudicator was to be appointed by the two arbitrators.
RIL would have got the right to appoint an arbitrator on behalf of the government if no response was made within the one month timeframe.
Sources said the oil ministry wants to consult the law ministry on the arbitration notice and appointment of arbitrators and accordingly sought an extension of the deadline.
The ministry was moving toward restricting cost-recovery—now at 100%—in proportion to gas output from the KG-D6 fields.
RIL has built facilities to handle 80 million metric standard cubic metres per day (mmscmd) of gas production, but the fields are producing less than half of that due to a fall in reservoir pressure and water ingress.
As per the 2006 Field Development Plan, where capital expenditure in Dhirubhai-1 and 3 fields was hiked to $8.8 billion from $2.47 billion previously, RIL was to produce 61.88 mmscmd gas from 22 wells by April this year and 80 mmscmd from 31 wells by 2012.
RIL stopped drilling in D 1&D 3 after the last four of the 22 wells drilled in the fields yielded non-commercially exploitable volumes and decided to do more studies.
However, oil minister S Jaipal Reddy last week insisted in Parliament that all 31 wells outlined in the development plan must be drilled by March, 2012, blaming the production decline on the failure to do so.
At the same time, he also admitted that four wells in D 1&D 3 had stopped producing because of water incursion and sand deposits and one of the six wells in the MA field of the same block has been shut because of water incursion.
Sources said based on the opinion of the Solicitor General of India (SGI), the ministry wants to “disallow expenditure incurred in constructing production/processing facilities at the D 1 & D 3 fields in the KG-D6 block that are currently under-utilised/have excess capacity because of falling output”.
Production Sharing Contracts (PSC) allow operators to recover 100% of their exploration and production costs and do not link cost-recovery to output.
RIL had envisaged a gas output of 80 mmscmd from KG-D6 by 2012 through an investment of $8.8 billion.
However, current output is about half of the target and RIL has so far invested only $5.8 billion.
The latest figures show gas production from the Dhirubhai 1 and 3 fields in the Krishna-Godavari Basin in the Bay of Bengal falling to a fresh low of 32.94 mmscmd, down from the 54 mmscmd peak hit in March 2010, before well pressure dropped and water incursion began.
According to the Reliance development plan approved by the authorities, output should have reached 61.88 mmscmd this month. Associated gas production from the MA oil field in the same licence area was 6.86 mmscmd, for a combined total of 39.8 mmscmd, versus the expected 70.39 mmscmd.
“Commitment on FDI, PFRDA all the major legislations, which are part of the new generation reforms, are very much in the mind of the government. We are working hard to build consensus,” finance minister Pranab Mukherjee said
New Delhi: Expressing commitment to push forward economic reforms, finance minister Pranab Mukherjee Friday said the government is making efforts to build a consensus on important economic legislations, including PFRDA and foreign investment in multi-brand retail, reports PTI.
“Commitment on foreign direct investment (FDI), PFRDA (Pension Fund Regulatory and Development Authority) all the major legislations, which are part of the new generation reforms, are very much in the mind of the government. We are working hard to build consensus,” he said while speaking on the annual general meeting of the industry chamber PHDCCI.
The minister said the government wanted to push the PFRDA Bill, but could not do so because the UPA did not have the requisite numbers in the Rajya Sabha.
“We decided to have PFRDA legislated in this session of Parliament but could not do so ...not because of lack of intention or commitment... you have to recognise the very hard fact that legislation requires numbers which unfortunately Indian electorate has not given to us,” Mr Mukherjee said.
The PFRDA Bill, which seeks to increase participation of domestic and foreign players in the pension sector, has been pending with Parliament for past several years. According to reports, UPA ally Trinamool Congress has been opposing the Pension Reforms Bill.
On FDI in multi-brand retail, which has been put on hold, Mr Mukherjee said, “Sometimes we have problems and it creates confusion that even after announcement of a policy, government has to stop ...that does not mean that we have shelved it”.
Referring to growth prospects in the current fiscal, he said that the economy is likely to clock a growth of about 7.5%. "When I am talking of 7.5% I am not disappointed... situation is difficult... at the same time we have the capacity and resilience to overcome the difficulty.”
The economy grew by 8.5% in 2010-11.
Senior advocate Sunil Kumar, contended that Aseervatham Achary’s Thursday statement of being threatened by a person sitting in the court room was a ‘drama’ which was intended to influence the pending bail petition of Mr Raja’s former private secretary and co-accused RK Chandolia which would be heard by the Supreme Court on 2nd January
New Delhi: A Raja, former telecom minister and the key accused in the second generation (2G) scam, on Friday accused the Central Bureau of Investigation (CBI) in a Delhi court of making his ex-aide Aseervatham Achary a “false witness” to depose against him, reports PTI.
“He is a created false witness and this is my ultimate case,” senior advocate Sushil Kumar, who is defending Mr Raja, contended before special CBI judge OP Saini.
Mr Achary, Mr Raja’s former additional private secretary and a key CBI witness in the case, in his deposition gave details of how Mr Raja was in regular touch with other accused corporate honchos and their companies which were granted spectrum in violation of law.
Mr Kumar, cross examining the witness, further contended that Mr Achary’s Thursday statement of being threatened by a person sitting in the court room was a ‘drama’ which was intended to influence the pending bail petition of Mr Raja’s former private secretary and co-accused RK Chandolia which would be heard by the Supreme Court on 2nd January.
“This whole drama was meant for 2nd January when Mr Chandolia’s bail is coming in the Supreme Court as he (Mr Achary) told the court that the person threatening him was sitting with Chandolia,” Mr Kumar further said.
At this stage, the judge wanted to know whether Mr Achary had earlier complained about any threat to his life.
“He (Mr Achary) did not say anything earlier and had he said it then it would have been on record and many of them (accused) would not have got bail,” the judge said.
Mr Raja, who had refused for over a month to cross-examine witnesses saying he would not do so till CBI files its third charge-sheet and completes its probe in the case, started his defence Thursday by questioning Mr Achary.
The CBI had filed the third charge-sheet on 12th December after which Mr Raja had said that he will cross examine witnesses only when public servants depose on the issue of government policy.
Mr Raja had posed several questions to Mr Achary ranging from his conversation with former corporate lobbyist Niira Radia to frequently changing his residence and mobile numbers.
Mr Achary had Thursday complained to the judge that he was receiving threats from a person present in the courtroom who was sitting with Mr Chandolia in the morning.
The man, who had tried to run away, was caught but was released in the evening after the Delhi police found no ground to arrest him after interrogating him.