RIL moves SC over K-G gas cost dispute

Reliance Industries Ltd has sought the Supreme Court's intervention to appoint an arbitrator representing the government to help resolve the dispute over the recovery of cost for developing the Krishna-Godavari Basin gas field in the Bay of Bengal, ruling out amicable resolution of the dispute after months of discussions proved fruitless.

It has complained to the court through advocate Sameer Parekh that the petroleum ministry was not approving its budgets and was putting undue pressure on it to drill more wells, although geological data suggests this may be counterproductive.

RIL's petition stated that instead of appointing an arbitrator as per the arbitration agreement contained in the product sharing contract (PSC), the government has called upon the company to withdraw the arbitration notice it had issued on 23 November, saying there was no dispute.

RIL said that the government has wrongfully called upon it to withdraw the notice of arbitration. The petition said that RIL has already appointed former Chief Justice of India S P Bharucha as arbitrator, but the government has not yet appointed one, contravening its contract with RIL. It has asked Chief Justice S H Kapadia to appoint a second arbitrator on behalf of the government.

The move highlights the widening gulf between the oil ministry and the company. Since last year, RIL has reportedly been frustrated by long delays in official approvals and faced difficulties in meeting top officials.

The company also felt the national auditor had ignored many of its arguments in preparing an audit report that accused the oil ministry of being lenient in enforcing contracts with private firms.