 "RIL receives $2.81 billion demand notice from govt over gas dispute")
Mukesh Ambani-promoted Reliance Industries (RIL) on Tuesday informed exchanges that it has received a $2.81 billion demand notice from the oil ministry over the long-pending gas dispute related to its KG-D6 operations.
In another stock exchange announcement, RIL also said its new energy business wholly owned subsidiary has received a letter from the Ministry of Heavy Industries (MHI) levying liquidated damages related to its battery project.
Regarding the gas dispute, RIL said the Ministry of Petroleum and Natural Gas has raised a demand of $2.81 billion on the production sharing contract contractors — RIL, BP Exploration (Alpha), and Niko (Neco). RIL said it received the letter on Monday.
The demand notice follows a February 14 Delhi High Court (HC) order, in which a division Bench reversed the order of a single judge passed in May 2023. The May 2023 order had dismissed the Government of India’s (GoI’s) appeal challenging a previous arbitral award.
On Tuesday, RIL said that the company is “legally advised that the Division Bench judgment and this provisional demand are unsustainable”.
In July 2018, RIL won an arbitral award against the GoI’s claim on the KG-D6 consortium for roughly $1.55 billion, related to alleged gas migration from Oil and Natural Gas Corporation’s blocks.
RIL said it is taking steps to challenge the judgment of the division Bench of the Delhi HC. “The company does not expect any liability on this account,” it added.
“It is quite interesting to note that claims are being made against the consortium of RIL when, in fact, it appears that there is no order in favour of the Union of India, sustained by any court of law, to make claims against the consortium of RIL,” said Shrenik Gandhi, managing partner, Chambers of Shrenik Gandhi.
“If at all the claims of the Union of India are to be established against the consortium of RIL, the only option appears to be a re-trial before the arbitral tribunal. It is unlikely that any court would itself adjudicate/re-adjudicate the alleged disputes,” Gandhi added.
In a separate notification, RIL also informed exchanges that Reliance New Energy Battery Storage (RNEBSL), a step-down wholly owned subsidiary of the company, received a letter from the MHI on Monday.
The MHI letter, RIL said, refers to levying liquidated damages at the rate of 0.1 per cent of the performance security (₹50 crore) for each day of delay from January 1, 2025. The delays pertain to the achievement of the first milestone under the programme agreement executed with MHI for 5 gigawatt-hour manufacturing capacity. This capacity was awarded under the performance-linked incentive (PLI) scheme for advanced chemistry cell. RIL said the liquidated damages computed until March 3 add up to ₹3.1 crore.
RNEBSL has requested an extension of time for achieving the said milestone, the company said. RIL was awarded this PLI in 2022-23.
In its 2023-24 annual report, RIL noted that it is prioritising the establishment of its battery gigafactory by 2026 and fast-tracking the commercialisation of its sodium-ion battery technology, with plans to industrialise sodium-ion cell production at a megawatt level by 2025.
On Tuesday, RIL’s shares closed in the red for the second day this week at ₹1,161.7 per piece, down 0.8 per cent from the previous close. On Monday, RIL shares closed 2.4 per cent lower than the previous day’s close.
Case file
July 2018: RIL won an arbitral award against GOI’s $1.55 billion claim on the KG-D6 Consortium on account of alleged gas migration from ONGC’s blocks
May 2023: Single Judge of Delhi Court dismissed GOI appeal challenging a previous arbitral award
February 2025: The Division Bench of the Delhi High Court reversed the order from a single judge of the Delhi High Court
March 2025: RIL, partners receive $ 2.81 billion demand notice from GOI over gas dispute