Former SC judge G S Singhvi to represent govt in RIL gas price arbitration
18 Jul 2014
The Union government on Thursday announced the appointment of former Supreme Court Judge G S Singhvi as its arbitrator in the arbitration process initiated by Reliance Industries (RIL) and its partners over delay in revision of the price of natural gas from the Andhra offshore KG-D6 block.
RIL and its partners, BP Plc of the UK and Niko Resources of Canada, had on 9 May served a pre-arbitration notice on the government, after the government deferred the implementation of the decision to revise gas prices for a second time.
''Mr Justice GS Singhvi (Retd), former judge of the Supreme court of India, has been nominated as arbitrator on behalf of the Government of India in the arbitration initiated by Reliance Industries Limited, Niko (Neco) Limited and BP Exploration (Alpha) Limited against the government under the block KG-DWN-98/3 (KG-D6),'' the petroleum ministry said in a statement on Thursday.
The revision of the price of domestically-produced gas, which was due on 1 April, was first deferred on instructions by the Election Commission and later by the new government which assumed power after the elections.
RIL says the stalling of the gas price revision with effect from 1 April, has prevented the company from sanctioning investments to the tune of $4 billion.
RIL and its partners served a formal notice of arbitration on 17 June, naming London-based David Steel as their arbitrator.
Under the production sharing contract signed with RIL, the government had 30 days ending 17 July 2014 to appoint its arbitrator.
The previous government had on 10 January notified a new domestic gas pricing formula that would have doubled the gas rates from 1 April, but did not implement the disputed formula for various reasons, including the announcement of the general elections.
The Election Commission asked the then government to leave the decision to the new government and revision of rates was put off to 1 July. The new government last month decided to defer a decision until October, pending wider consultations for a new gas pricing formula.
Reliance is also involved in a dispute with the government over falling output at the KG-D6 fields amidst rising claims of investment. RIL initiated the arbitration after the government disallowed RIL $1.8 billion of its investment due to the shortfall in production. It has since disallowed another $500 million of RIL's investment claims
In that case, RIL and its partners have named former chief justice of India S P Bharucha as their arbitrator, while the government has chosen ex-CJI V N Khare. The Supreme Court in April appointed a retired Australian judge, Michael Hudson McHugh as chief arbitrator in the dispute.
RIL owns 60 per cent in the block in which BP owns a 30 per cent stake and Niko Resources 10 per cent in the D6 block in the Krishna-Godavari (KG) basin off India's east coast.. Analysts see the arbitration move as a positive development Mukesh Ambani-controlled RIL and its partners BP Plc and Niko Resources Ltd.
