You are here: Home » Companies » News
Business Standard

RIL mounts counter to govt petition seeking to block its $15 bn Aramco deal

RIL maintained that except as quantified by the tribunal, no amount can be said to be payable at this stage

Reliance Industries | RIL | Saudi Aramco

Press Trust of India  |  New Delhi 

reliance industries, RIL

(RIL) has mounted a strong counter to the government petition in the Delhi High Court (HC) seeking to block its $15-billion deal with Saudi Aramco, saying the petition is an abuse of process as no arbitration award has fixed any final liability of dues on the company.

In a counter affidavit, said it was a ‘falsehood’ that the arbitration tribunal had passed an award requiring the company and its partners to pay $3.5 billion to the government. It said the petition was an abuse of process as “it portrays that a sum of money is due and payable under the final award and purports to compute the money payable on a basis neither found in the arbitration award nor disclosed in the petition.”

The government, it said, has calculated on its own volition the revised figure of its share of profit from oil and gas production, allegedly due by extrapolating the purported finds.

The affidavit came in response to the government moving the Delhi HC, seeking to block selling a 20 per cent stake in its oil-and-chemicals business to for $15 billion, in view of dues of $3.5 billion in the Panna-Mukta and Tapti oil and gas fields.

An international arbitration tribunal issued a partial award in October 2016 in the dispute between the Government of India (GoI), BG Exploration & Production India (BG), and regarding the Panna-Mukta and Tapti production sharing contracts (PSCs). The tribunal in its 2016 award determined certain issues of principle.

Pending the determination of all issues before it, appropriately, it did not award any monetary sums. Quantification of amounts, if any, by the tribunal is to be done when all issues have been decided.

Certain parts of the 2016 award were challenged by BG/RIL before an English court wherein it decided some parts of challenge in favour of BG/RIL and directed the arbitration tribunal to reconsider those parts of the 2016 award. The tribunal, having reconsidered, issued another partial award in December 2018, which was in favour of BG/RIL. While this challenge was pending in the English court, the government unilaterally calculated certain amounts, based upon its interpretation of the 2016 award, which the government alleges are payable by Oil and Natural Gas Corporation (ONGC), BG, and RIL.

RIL said pursuant to the 2018 award, the government’s claim comes down very significantly — a fact which the government has not taken cognisance of and approached the Delhi HC prematurely for enforcement of its claim computed based on its interpretation of the 2016 award.

RIL maintained that except as quantified by the tribunal, no amount can be said to be payable at this stage. The government has challenged the 2018 award and the English court is yet to pronounce its judgment.

One of the most significant issues pending before the tribunal is an increase in the cost recovery limit under the PSC. The arbitration tribunal is scheduled to hear BG/RIL’s application for increase of PSC cost recovery limit next year. If the tribunal decides in favour of BG/RIL, then the government’s computation of sums allegedly payable by ONGC, BG, and RIL is expected to further come down.

Final amounts payable, if any, by the parties (ONGC 40 per cent, BG 30 per cent, and RIL 30 per cent) can only be determined by the arbitration tribunal in the quantification phase of the arbitration which will be scheduled after it has decided on all the issues before it, it said.

ONGC, who was directed by GoI in 2011 not to participate in the arbitration proceedings but be bound by the award, wrote to the stock exchanges in May 2018 that the government’s demand is premature. The 2016 award, in part superseded by the 2018 award, cannot be said to have attained finality and attempts to enforce the 2016 award are premature, RIL said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Sun, December 22 2019. 15:00 IST