The government today decided to join the arbitration initiated by Reliance Industries and its partners over delay in revision of natural gas prices, and named former Supreme Court judge G S Singhvi as its arbitrator.
This is the second arbitration between RIL and the government over eastern offshore KG-D6 block. RIL had in November 2011 initiated an arbitration against government move to disallow recovery of certain costs over gas output from KG-D6 block not matching the targets.
With the government delaying a revision in gas prices, RIL and its partners BP Plc of UK and Canada's Niko Resources had on June 17 served an arbitration notice on the government naming London-based Sir David Steel as its counsel.
"Justice GS Singhvi (Retd), former judge of the Supreme Court of India, has been nominated as Arbitrator on behalf of Government of India in the arbitration initiated by RIL, Niko and BP against the Government," an official statement said.
The three firms want the government to honour its commitment and implement revised natural gas prices upon expiry of the USD 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.
RIL-BP-Niko 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 USD 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).
RIL-BP-Niko on June 17 served a formal arbitration notice naming Steel as their arbitrator.
While the government had not entertained the May 9 notice, it had 30 days to reply to the June 17 Notice of Arbitration (NoA).
In November 2011, RIL had started its first arbitration proceedings against the government, seeking a decision on its entitlement to recover investments made in the KG-D6 gas