Government Fines Rs 2500 Crore on Reliance Industries
Recently Government has slapped an additional fine of US $380 million (approx. Rs 2500 crore) on Reliance Industries Limited and its partners for making less than targeted natural gas from eastern offshore KG-D6 fields.
The Production Sharing Contract (PSC) permits Reliance Industries Limited and its partners BP Plc of the UK and Canada’s Niko Resources to subtract all capital and operating expenses from the sale of gas before sharing revenue with the government.
Up to financial year 2013-14, the cost recovery planned to be rejected was US $ 2.376 billion and consequent demand of Government of India share of additional revenue petroleum of US $ 195.3 million on cumulative basis.
According to RIL statement, “On 3rd June 2016, the company received a revised claim up to year 2014-15 with a disallowance of US $ 2.756 billion on cumulative basis and consequent demand of Government of India share of additional profit petroleum of US $ 246.9 million, also on cumulative basis.”
Gas production from Dhirubhai-1 and 3 gas field in the eastern offshore KG-D6 block was made-up to be 80 million standard cubic meters per day. But the actual production was only 35.33 mmscmd (Million Metric Standard Cubic Meter Per Day) in 2012-13, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14.
And the production has been around 8 mmscmd in following year. The Government of India had for 2010-11 rejected US $ 457 million of cost, US $ 548 million for year 2011-12, US $ 792 million for year 2012-13 and US $ 579 million for 2013-14 year.
But now another US $ 380 million cost has been rejected for production lagging behind target in year 2014-15. The production was behind target in year 2015-16 as well and the Government of India is yet to issue a cost disallowance notice for that.
RIL said that the additional revenue petroleum claimed, the Government of India has already collected gross US $ 81.7 million in Gas Pool Account.