Petroleum ministry to cap RIL claim on expenses under production sharing

Mukesh AmbaniPetroleum secretary, GC Chaturvedi said yesterday that the petroleum ministry would initiate action against Mukesh Ambani owned Reliance Industries Limited (RIL) for capping the amount claimed by the company, for the KG basin D6 block development, which has seen a huge fall in natural gas output.

"We had sought an opinion of the Law Ministry on restricting cost recovery in proportion to the gas output. We have received the opinion. We are considering it and will take a decision in three to four weeks on the action to be taken," Chaturvedi told reporters in New Delhi on the sidelines of an energy conference.

RIL has built facilities for handling 80 million cubic metres per day (MCMD) of gas production, but the current output from the fields has been measured at less than half the figure. In fact, in an indication that the government would not hesitate to take a hard line against RIL, Chaturvedi said the government would even consider amendment of the production sharing contract (PSC) if required.

Replying to a query as to whether the PSC provided for restriction of cost-recovery, Chaturvedi said the government was studying that and clarified that it would not hesitate to amend the PSC if required in the RIL case. If need be, the PSC would be changed, he added..

''We will decide on the next course of action in 3-4 weeks," he remarked.

Union law and justice minister Salman Khurshid also concurred with the opinion of the solicitor general, Rohinton F Nariman that $1.85 billion - out of the $5.694 billion FDP investment be disallowed to RIL and arbitration proceedings be initiated for recovery of the money belonging to the public exchequer.