Reliance Industries and its partners BP plc of UK and Canada’s Niko Resources have slapped an arbitration notice on the Government seeking implementation of a delayed gas-price rise.
The trio had on May 9 issued a “pre-arbitration notice” saying failure to implement the increase from due date of April 1 is preventing them from sanctioning investments of almost $4 billion this year.
This arbitration notice wasn’t complete as the partners did not name their arbitrator as required for dispute resolution under the Production Sharing Contract (PSC), sources privy to the development said.
RIl-BP-Niko on June 17 served a formal arbitration notice naming london-based Sir David Steel as its arbitrator. The three firms want the government to honour its commitment and implement revised natural gas prices upon expiry of the $4.2 per million British thermal unit rate for their eastern offshore KG-D6 gas fields on March 31, 2014.
The previous UPA Government had on January 10 notified a new domestic gas pricing formula that would have doubled the gas rates from April 1 but before it would announce the new price general elections were declared.
The Election Commission asked the UPA to leave the decision to the new Government and revision of rates was put off to July 1. The new government last month decided to defer a decision by a further three months pending wider consultations on the formula.