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Govt may have to send legal notice to RIL: Oil minister

The oil ministry and its technical arm the Directorate General of Hydrocarbons blame the fall in output from KG-D6 fields to 34.5 mmscmd instead of 70.39 mmscmd planned for now and 80 mmscmd by April due to company drilling fewer number of wells than it has committed

Gurgaon: Oil minister S Jaipal Reddy on Tuesday said the government may have to send a notice to Reliance Industries (RIL) to curtail cost-recovery at its KG-D6 gas fields as the company drilled fewer wells than planned, reports PTI.

“I think we may have to send notice but I do not want to commit until I get proper advice from the law ministry,” he told reporters here.

The oil ministry and its technical arm the Directorate General of Hydrocarbons (DGH) blame the fall in output from KG-D6 fields to 34.5 million metric standard cubic meters per day (mmscmd) instead of 70.39 mmscmd planned for now and 80 mmscmd by April due to company drilling fewer number of wells than it has committed.

DGH wants $1.235 billion of out of the $5.7 billion expenditure already made in KG-D6 to be disallowed as RIL has drilled and completed only 18 wells as against agreed the 31 wells in the block, resulting in lower gas output.

“We are consulting our legal advisers (on sending the legal notice). Now it is for normal legal process to go through,” he said.

Anticipating such a move, RIL had on 24th November slapped an arbitration notice saying the Production Sharing Contract allows 100% of expense to be recovered and has no provision to restrict cost recovery in proportion to output.

But the ministry and DGH feel RIL had ‘woefully’ fallen short of drilling the required number of wells and/or utilising the total number of wells already drilled has taken an irreparable toll on the projected production targets.

They feel that had RIL performed its obligations under the PSC and the approved field development plan, the production rate ought to have been touching 80 mmscmd at present, rather than showing a gradual trend to decline.

Further, RIL drilled two wells in 2010-11 and another two wells in 2011-13. However, these have not been connected to production facilities, thereby resulting in less output.

The company has indicated that these wells would be completed and connected to the production facilities by mid 2013-14, which the ministry saw as clear non-compliance with the approved field development plan.

RIL says it has not drilled the committed number of wells as the reservoir has not behaved as predicted and output dipped due to a fall in pressure and water and sand ingress in wells.

RIL had appointed SP Bharucha, former chief justice of the Supreme Court, as its arbitrator and had asked the ministry to appoint its arbitrator within 30 days.

The ministry had days before the 23rd December deadline expiry sought a one-month extension to respond to the notice and after receiving the law ministry’s opinion, last month wrote to the company saying its claims are based on surmises, conjecture and apprehensions and RIL should withdraw the arbitration notice.

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RBI issues draft norms on White Label ATMs owned by non-banks

The draft guidelines said non-bank entities proposing to set up WLAs have to apply to RBI for seeking authorisation under the Payment and Settlement Systems Act, 2007. Non-bank entities proposing to set up such service will have to have a minimum net worth of Rs100 crore, the RBI added

Mumbai: In a bid to accelerate the growth and wider spread of ATMs, the Reserve Bank of India (RBI) on Tuesday issued draft guidelines for permitting non-banking entities to set up, own and operate such money dispensing machines, reports PTI.

Non-bank entities proposing to set up such service will have to have a minimum net worth of Rs100 crore, RBI said.

“The RBI has sought views/comments on the draft circular from banks, authorised ATM network operators, non-bank entities and members of public,” it said, adding that the stakeholders can make suggestions by 6th March.

The central bank said that it has reviewed the extant policy on ATMs.

“... it has been decided to permit non-banks to set up, own and operate ATMs to accelerate the growth and penetration of ATMs in the country. Such ATMs will be in the nature of White Label ATMs (WLA) and would provide ATM services to customers of all banks,” the draft guidelines said.

The banking sector has seen considerable growth in ATMS in recent years with around 87,000 machines operational across the country. However, they are largely restricted to the urban and metro areas.

“Although there has been about 30% year-on-year growth in the number of ATMs deployed in the country since 2008, ATM penetration on a per capita basis continues to be less compared to other countries.

“There is, therefore, an abundant scope and a felt need to deploy more ATMs, particularly in Tier III to VI areas of the country,” the apex bank said.

The draft guidelines said non-bank entities proposing to set up WLAs have to apply to RBI for seeking authorisation under the Payment and Settlement Systems Act, 2007.

It suggested that only the cards issued by banks would be permitted to be used at the WLAs initially and acceptance of deposits shall not be permitted.

“The WLA operator will be the ‘acquirer’ for all transactions at the WLA and earn his fee accordingly,” it said.

The WLA operator would be permitted to earn extra revenue through advertisement and by offering value-added services.

“The advertisements placed on such ATMs would be subject to Advertising Standards Council of India (ASCI) codes and other regulations,” the RBI draft proposed.

It also added: “Being non-bank owned ATMs, the guidelines on five free transactions in a month for using other bank ATMs would not be applicable for transactions effected on the WLAs.

The charges for the transactions should be displayed on the screen before the customer initiates the transaction.”

As per the draft guidelines, the WLA operator would not be entitled to any other fee from issuer bank other than the ‘Interchange’ fee payable to acquirer bank under the present bank owned ATM scenario.

“The WLA operator shall also not be permitted to charge any fee from the customers for the use of the ATM resources,” it said, further suggesting that regulatory guidelines relating to compensation for failed ATM transactions would apply to transactions at WLAs.

“General guidelines governing the operations of the bank operated ATMs would apply mutatis mutandis to WLAs,” the draft guidelines said.

The operator will have one ‘sponsor bank’ which will serve as the settlement bank for of all the transactions at the WLAs.

Settlement of all the transactions at the ATMs shall be done only in the books of the sponsor bank through the ATM network with whom the operator has established connectivity.

The maintenance and servicing of the WLAs shall be the sole responsibility of the operator. The sponsor bank would be responsible for cash management at the WLAs.

“For the purpose of cash management, the sponsor bank may enter into tie-ups with other banks for loading and reconciliation of cash at various WLAs at locations where it has no presence,” the draft guidelines proposed.

While the primary responsibility to redress grievance of customers relating to failed ATM transactions will vest with the issuing bank, the sponsor bank will have to provide necessary support in this regard, including making available relevant records and information, it added.

White-level ATMs are not owned by banks but by private ATM service providers. Customers from any bank can deposit or withdraw money from such ATMs.

Besides increasing banking services, it will help sponsored banks to set up ATMs without incurring capital expenses for owning money dispensing machine.

At present, brown label ATMs are allowed in the country.

In such cases, the hardware as well as lease is under the ownership of the service provider, while connectivity and cash handling and management is the responsibility of the sponsor bank.

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